If you have a bank account, an insurance plan, investment account you have probably been asked to designate a beneficiary.
Why you should assign beneficiaries
For all assets, whether a bank account, investment account, insurance policy, vehicle, house, etc. if there was paperwork to set it up, there will be paperwork (and likely taxes and lawyers) to transfer them after someone has died. You, as the current living owner of the asset, can help minimize that paperwork now by assigning beneficiaries where they are applicable.
Assigning a beneficiary can help keep assets out of probate, avoiding the associated court and lawyer fees (usually about 3-8%)
Your beneficiary
ben·​e·​fi·​cia·​ry noun: a person or entity (as a charity or estate) designated usually in a legal instrument to receive money or property
NOTES:
Beware of contradictions! If your will states one person is the beneficiary (e.g. a spouse), but you designate a child as the policy beneficiary the policy may take precedent over the will and result in still going to legal proceedings.
If you hold multiple investment accounts, beneficiaries from non-retirement accounts are NOT automatically assumed for retirement accounts.
If your estate has debts, and only the assets assigned to beneficiaries are available the debts must be settled from those funds first.
Beneficiaries are usually changeable, but may be locked in the case of divorce terms or an “irrevocable designation”
Types of Beneficiaries
Tax Implications
Depending on the type of account and the relationship of the beneficiary there may be different rules about how the asset is inherited and therefore taxed. It is an important decision and you may want to consult a financial advisor when choosing who to designate.*
Information You'll Need
To assign a beneficiary you will usually need to fill out paperwork with the institution that holds the asset account. They usually require:
Naming non-people:
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Trust: Full Name, Date of Trust
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Funeral Home: Name “Funeral Home” without an exact name
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Organization: Exact Name, Address, Contact Information
If ever you have concerns or questions, talk to your attorney or financial advisor to make specific plans about your unique situation.
*J&C Deiseil LLC is not a legal or financial institution. This document is only for informational purposes and does not constitute legal or financial advice. This list is not comprehensive and should be used as a starting point for finding and tracking beneficiary designations.
Resources
Understanding and Choosing Beneficiaries | Arizona.edu
Naming a Beneficiary: What you need to know | Securian.com
Retirement topics- Beneficiary | Internal Revenue Service
Veteran Benefits - Beneficiaries | VA.gov
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