Giving Your Financial Accounts A Beneficiary Is Important

Many estate plans are comprised of financial accounts, such as a life insurance policy or savings account. Your financial accounts should be given a beneficiary before you pass. Not doing so can lead to serious problems.

By going over why giving your financial accounts a beneficiary is so important, and speaking with a Florida estate planning lawyer at Millhorn Elder Law Planning Group we can help you develop an estate plan that satisfies your wishes. 

What Is A Beneficiary?

A beneficiary is a person, or entity, that has been designated to receive certain benefits. These benefits might include the assets in your will, specific financial accounts, or assets in a trust; among many other possibilities.

You can name a particular individual as a beneficiary – your son, for example. Or, you may be able to name an entity as a beneficiary – a charity that you support, for example.

Here is one example of the above: if you have a life insurance policy, you can name a beneficiary that will receive this policy after you pass away. Doing so allows the money to go to this person.

If you do not name a beneficiary for your assets, the court will need to select a beneficiary. Doing so comes with its fair share of complexities, some of which can be found in the space below. 

Why Is Giving Your Financial Accounts A Beneficiary So Important? 

Many financial accounts allow you to designate a beneficiary. Designating a beneficiary allows the funds within the account to go to that person right after your passing.

In the event that you do not designate a beneficiary, your financial accounts may pass through probate. Probate is a long, expensive process that is meant to validate your assets and ensure that they go to the right place.

Just as an example, if your life insurance policy has no beneficiary, it may go through probate. Your family could spend months waiting for the money in this policy. On top of that, some of the funds within the policy may be used to pay for probate, which could leave your family with far less than they were supposed to receive.

To ensure that your beneficiaries receive all of the money you wish to give them, you should designate a beneficiary for your financial accounts.

Outside of the above, there is one more thing to note: some financial accounts cannot bypass probate. If this is the case, a trust may be worth looking into, as most trusts can bypass probate. 

How Do Beneficiary Designations Affect Your Other Assets? 

Beneficiary designations allow specific assets to go to specific people. If you have a particular asset that you would like to give to a particular person, you can designate a specific beneficiary for that asset.

For example, if you want to give your daughter one of the homes you own, you can designate your daughter as a beneficiary. Doing so makes it a lot easier for your daughter to get this home.

Even though the above is true, many assets must go through probate. Probate can lead to your beneficiaries receiving less than you wish to give them after a long waiting period. Developing a trust can solve this, however. 

Speak With A Florida Estate Planning Lawyer Today 

If you need help naming beneficiaries, a legal professional may be able to help you. Speak with a Florida estate planning lawyer today to satisfy your estate planning wishes.

Sources: 

law.cornell.edu/wex/beneficiary

law.cornell.edu/wex/trust