For many people, the estate planning process is about developing a trust or last will and testament. While those are common estate planning tools, other options could be available to you and your dedicated estate planning attorney. One of those tools is known as beneficiary designations.
A beneficiary designation involves naming a particular individual as the future beneficiary of an asset or account. Typically, these assets transfer immediately upon death to the beneficiary. This is helpful from an estate planning perspective, as the assets transfer outside of the probate system. Let Marc Brown, P.A., our knowledgeable lawyer advise you regarding beneficiary designations in Fort Lauderdale estate planning.
Why Designating Benefits is Important
Relying on beneficiary designation as part of your estate planning process offers significant benefits. It allows you to pass on your assets to a beneficiary without the need for probate.
Taking care when choosing your beneficiaries is also important because selecting the wrong one could bring unexpected tax consequences for them. If you designate your spouse or child, they have more options about when and how to access the money, while other people are more restricted. The taxes each group pays is also different. Surprise tax bills could harm your beneficiary, even though you intended to provide for them. Our competent lawyer can suggest the best assets to leave for the individual people you want to select as beneficiaries.
Updating Beneficiary Selections
It is not enough for you to name a beneficiary and never revisit the issue again. Estate planning attorneys in Fort Lauderdale typically recommend that you evaluate benefit designations on a regular basis. Reviewing these designations periodically is helpful, but it could also be beneficial to do so after major life changes, including:
- The death of a spouse
- The birth of a child
Each of these circumstances is an opportunity to reconsider beneficiary designations. The failure to do so could lead to consequences during the estate planning process, including benefits going to an unintended party or causing unexpected tax obligations to occur in the future. Updating designated beneficiaries on a regular basis is as much about ensuring the right person is selected as it is making certain that the wrong person is not serving as a designee.
What Happens to Beneficiary Designations upon Divorce?
You may wonder about the effects a divorce could have on beneficiary designations. Most people would prefer their former spouse not be the beneficiary of their life insurance policy or other assets. According to state law, certain designations can terminate automatically upon the dissolution of a marriage.
Common examples where designations automatically terminate involves life insurance policies included as part of employee benefits, payable-on-death accounts, or retirement accounts. However, this beneficiary designation will not automatically terminate if contractual language or a court order prevents it from doing so. A Fort Lauderdale lawyer with experience in estate planning can offer helpful insight into how divorce might impact beneficiary designations.
Discuss Beneficiary Selection in a Fort Lauderdale Estate Planning with an Attorney
If you are unsure of your options when it comes to beneficiary designations in Fort Lauderdale estate planning, rest assured a skilled attorney can help. These designations could have tremendous benefits from your heirs, but they could also lead to financial pitfalls when mistakes are made. Contact Marc Brown, P.A., our experienced attorney right away to discuss your beneficiary designation options.