Before they start estate planning, many individuals may be under the impression that their assets will simply be distributed to their spouse or other next-of-kin after they die. While that may be the case for some assets and accounts, some may already have named designated beneficiaries. There are many benefits to having accounts with designated beneficiaries, provided the beneficiary named is the intended recipient. If not, there can be serious legal challenges, as technically the beneficiary designation overrides a will. It is therefore important for Florida estate planners to review the names designated as beneficiaries on all accounts with this feature.
There are a variety of accounts that may have a designated beneficiary listed. These include retirement accounts — such as 401(k)s and IRAs, pension plans, life insurance policies and “transfer on death” accounts. The main advantage of these accounts is that they allow for a timely and smooth transfer of funds between parties without the need for a burdensome probate process. However, if the wrong person is named on the account, this can turn from an advantage to a significant legal challenge.
Account holders should regularly review this information, especially when there is a major life change. For example, a divorcee may want to confirm that his or her ex-spouse is not named on any accounts. Or, someone whose beneficiary recently passed away may wish to name someone else or risk the account going into probate. Having a routine by which details such as these are regularly reviewed is a good idea to avoid such instances.
Fortunately, changing the names of listed beneficiaries is often a fairly easy thing to do. In many cases, it can be done online or over the phone with the financial institution. Making sure these designations align with what is written in one’s will can help support a straight-forward estate administration process. Along with these designations, it is important to have a will, power of attorney, and other key documents drafted in collaboration with a Florida lawyer as well.