Planning for your family’s future is important for any New York resident. Pay careful attention to your beneficiary designations using these tips.
Name beneficiaries
Obviously, you must name beneficiaries who will inherit property and assets from your estate after you’re gone. When you name specific beneficiaries, it can also prevent your assets from going to “default” beneficiaries you might otherwise not have left them to.
Name contingent beneficiaries
Don’t forget to name contingent beneficiaries. These are alternate individuals who inherit assets in the event that your first-choice beneficiary dies before you. If you don’t have a backup choice or more than one, you might instead want to consider naming a charity to inherit your money.
Update beneficiaries when circumstances change
Whenever circumstances in life change, you should update your beneficiaries. The birth of a child, a new marriage, a divorce, remarriage and death are all major events that mean that you should update beneficiaries in your estate plan and on your life insurance and policy, IRA, retirement and other types of accounts.
Don’t name your estate
Naming your estate as a beneficiary on your financial accounts is something you should avoid. While it can prevent the account from going through probate, it could bypass going to a person you wish to inherit the funds from it. There are also potentially unfavorable tax consequences associated with accounts that have your estate named as a beneficiary.
Confusing beneficiary names
Confusing a beneficiary’s name can cause issues. If you accidentally misspell someone’s name or think they are a Junior (Jr.) when they’re really the Third (III), it can cause problems with their inheritance that might have to go through the court to clear up.