When beginning to work on your estate plan, one decision to prioritize involves distributing your estate among your chosen beneficiaries. The idea of your loved ones dealing with the probate process after your death may be concerning. You can look for other options to avoid this process the best you can.
One way to allow you around probate and avoid the hassle and expense of this process is by directly assigning beneficiaries to your financial accounts.
Sometimes referred to as “beneficiary designation,” this option simply refers to designating specific beneficiaries to your different financial accounts instead of just listing these instructions in your Last Will and Testament.
The primary advantage of adding beneficiary designations is it streamlines the distribution process after you die. It ensures your loved ones are taken care of without additional hassles and stress.
Another advantage of including direct designation of beneficiaries is your loved ones may avoid the complication and expense of probate. In most cases, assets and property not included in a trust or already designated to a beneficiary must go through the probate process, even if the estate owner has a Last Will and Testament.
The best way to add beneficiaries to your financial accounts is to contact the different institutions directly and find out their specific procedures. From your checking or savings accounts, to IRAs and other retirement accounts, designating beneficiaries generally involves filling out a form from the bank or financial institution.
You should be able to change or revoke the beneficiary designation as long as you are of sound mind when making the decision. You may have to fill out additional forms with your bank or financial institution.
You don’t need an attorney to add beneficiaries to your financial accounts. However, depending on the worth of your assets, you may still consider consulting an estate attorney about any potential tax issues.
Beneficiary designation does not necessarily take the place of a will. You still need this document to list your final instructions and give any other details regarding the rest of your estate.