One of the key tasks people face when creating a comprehensive estate plan is naming their beneficiaries. Beneficiaries are the individuals who will receive the assets left behind in an estate. Naming the right individuals and doing so in the right documentation, is critical for a proper estate plan. Here are some tips to help those in Michigan be as proactive as possible when it comes to their beneficiary naming:
- Utilize beneficiary designations on accounts: Bank accounts, retirement savings and insurance policies typically have beneficiary designations, meaning that the funds can be transferred directly to another individual after the account owner’s passing rather than going through probate. This can save a great deal of time and resources, especially in the case of retirement accounts.
- Name a contingent beneficiary: When completing beneficiary designations, it is a good idea to name a backup along with the primary beneficiary. This is important because if the named beneficiary passes away or otherwise does not want to claim the assets, there will still be someone who can retain the assets.
- Use exact names: When putting together an estate plan, using terms such as “my children” or “aunts and uncles” can be dicey. This leaves room for individuals to claim this relationship, or alternatively, for people who should have received inheritance to get none due to a state’s definition of the term. For example, the state may not designate stepchildren as children, even if the testator intended for stepchildren to receive assets.
As with anything in estate planning, being comprehensive and communicative is key. Beneficiaries should know they are named and understand the intentions that exist. In addition, regular review and update of estate planning documents with an experienced Michigan lawyer is advisable.
