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The importance of naming and updating beneficiaries

| Aug 17, 2020 | Estate Planning |

One of the lifelong goals for many people in New Jersey is to have an estate that they can then leave to their family members. After working to acquire assets, many create a will and other estate planning documents that will describe how — and to whom — they want their estates distributed. However, if appropriate thought is not given to beneficiaries, the person’s wishes may not be enforceable, even with a will or trust.

When naming beneficiaries, it is often beneficial for testators to consider the age of those who may inherit. If they are minors and no trustee is named, a family member or other adult will have to step in — through a process that can be time-consuming — to provide management of the assets until the children are adults. Additionally, many 18-year-olds may struggle with a large inheritance with no oversight. As such, many people choose to consult with an estate planning attorney to create provisions that establishes a minimum age for taking over the funds.

There are some assets in which the distribution is not controlled by a will. Life insurance policies and certain retirement funds, for example, have individually named beneficiaries. Even if the will is changed, those assets will be given to the person listed, making it necessary to also update them when changes occur. If the listed beneficiary has died or if there is no beneficiary listed, these assets could be distributed in a way contrary to the owner’s wish.

When it comes to the estate planning process, there are a variety of options. For example, some in New Jersey opt to create a trust, which can be listed as a beneficiary of a life insurance policy, for example, to give them more control of how and when assets will be divided. An attorney with experience with these tools can help people choose the options that are most appropriate for their individual circumstances, to help ensure that an estate is distributed according to the owner’s wishes.