Beneficiary details matter

On Behalf of | Jul 21, 2016 | Blog

Experts recommend regular reviews of estate planning details, which should include an evaluation of beneficiary designations on retirement accounts as well as insurance policies. A Nevada resident who neglects this could leave certain assets vulnerable to loss based on the inclusion of inappropriate individuals on policies or because of changes in laws related to those assets. Even with up-to-date information, an individual could make a costly error by failing to consult an estate planning professional before making or changing a designation.

A living individual is typically the best choice for a beneficiary, especially with a retirement account. However, entities such as charitable organizations can be listed if an owner wants to transfer remaining assets after their death. In trust planning, an individual might consider making a trust the beneficiary in order to facilitate more complex distribution goals with remaining funds. Because the laws can be complicated, professional guidance is important in such a scenario. Similar issues exist with life insurance policies.

An individual might not realize that a will or trust cannot override a beneficiary designation on an external account or policy. If there is a conflict between information in a will and the actual designation, the beneficiary listed on the asset in question will typically prevail. In case of a divorce or other serious life change, it is important to meet with a financial adviser or estate planning lawyer to make appropriate changes to designations.

Significant financial resources being left to minors could require legal oversight of such funds until the beneficiary in question reaches majority. A lawyer could be helpful in establishing a trust to receive retirement and other resources in the event of a parent’s death to ensure that an appropriate management system is in place to facilitate financial care for a minor child.