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Important Mistakes to Avoid When Selecting Your Beneficiary Designations


It may surprise you to know that your Will is not the only controlling document that determines who inherits your assets. Some assets pass to another person through a beneficiary designation. This is where you fill out a form with the company that holds the assets, and you choose one or more people to inherit these assets when you die.

Assets that pass by beneficiary designation can include things like retirement accounts, such as IRAs, 401(k)s, 403bs, and similar); along with annuities and life insurance. There are also non-retirement assets that are POD (payable on death) or TOD (transfer on death). While beneficiary designations are supposed to make things easier, they can also lead to numerous problems and conflict. When you have a dispute, it may be necessary to hire a Pompano Beach probate litigation attorney.

You must ensure everything is filled out correctly. If you don’t, mistakes can cost you a lot. Here’s a look at some of the most common mistakes people make regarding beneficiary designations.

Failing to Name a Beneficiary

The first major mistake is not naming a beneficiary at all. For whatever reason, some people never end up choosing someone as their named beneficiary on a retirement account or life insurance. Each company has its own rules on where the assets will go once you pass away. For example, life insurance may go into your probate estate.

Not Updating Your Beneficiary or Listing the Right Name

Another common mistake is either naming the wrong beneficiary or not updating it. People who have Jr., Sr., etc. need to be listed exactly right, or it could be the wrong beneficiary. Also, people could change their names, such as marriage or divorce. You need the correct legal name on the beneficiary designation.

It’s also good to look at your beneficiary designations from time to time. What if you recently got divorced or remarried, and your ex-spouse is still listed on your retirement accounts or life insurance policies? A good rule of thumb is to regularly review this information to ensure your most recent wishes are reflected.

Not Accounting for Special Circumstances

There are some situations where someone should not be the direct beneficiary of the asset, and you will need to make special arrangements. For example, a minor, or someone with special needs. You may also have a family member whose money management skills are questionable. Creating a trust in these situations might make more sense. Otherwise, your family could run into complicated legal issues when you pass away. For example, someone who is a minor cannot claim an asset. Your family would need to appoint a conservator to handle, which can be expensive. Someone who has special needs could lose valuable assistance and benefits when receiving an inheritance.

Contact a Pompano Beach Probate Litigation Attorney

Failure to review your beneficiary designations while still alive can create numerous problems and disputes when you pass away. If you are an interested party who is dealing with a family conflict or other complicated legal issue related to a trust or probate, you need a Pompano Beach estate & trust litigation lawyer on your side. Contact Mark R. Manceri, P.A. today to schedule a consultation to learn how we can help.


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