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Choosing the right beneficiary

| Jul 8, 2016 | Estate Planning |

New Jersey residents should be aware of the importance of keeping their beneficiary designations up to date and making th right choice. There are a number of assets that are passed on using a beneficiary designation including retirement accounts and life insurance.

A number of people do not think very hard about who they choose as their beneficiary, or they think about it once and do not think about it again. As a result, they might choose the wrong beneficiary or they might fail to change the beneficiary as needed. For example, a person might name a minor child, and this could cause problems if the child cannot legally inherit the asset. A person who does not regularly review beneficiary designations might forget to change them after a divorce or if the beneficiary dies.

Many people may name a spouse first and then adult children as beneficiaries. People can also name a charity if they wish. It is possible to make a trust a beneficiary, but a person might want to look into the tax implications.

Beneficiary designations are only one aspect of estate planning. People should also consider creating a will and possibly a trust although they should keep in mind that beneficiary designations override wills. They might want to discuss their situation with an attorney because there might be a number of options they are unaware of. For example, many people think that trusts are for wealthy families, but trusts can have many uses. For example, they can be a way to help support a relative with special needs who might receive governmental help without jeopardizing those benefits. Living wills and powers of attorney may also be important estate planning documents.