Tips for making beneficiary designations

On Behalf of | Jul 26, 2017 | Firm News, trusts

Some North Carolina residents may have filled out beneficiary designations for their retirement account along with a lot of other new hire paperwork. They may not have carefully considered their choices, or it could be time to make changes to those designations. There are other assets, such as taxable brokerage accounts, that also are passed on with beneficiary designations. A person should take a number of things into account in choosing beneficiaries.

There should be contingent beneficiaries in addition to the primary beneficiary, and it is also possible to name multiple beneficiaries and divide the asset between them. For retirement accounts, a spouse may be the best choice as a beneficiary because there are special benefits such as the ability to roll the proceeds into an IRA. Whatever the choices, it is important that they work as part of the larger estate plan. Beneficiary designations override instructions in a trust or will.

Charities may be beneficiaries. Minor children cannot inherit property, but assets can be placed in a trust for them, or a guardian can be appointed to manage their assets. It may also be necessary to set up a trust for relatives with special needs so they do not lose access to government benefits.

An attorney may be able to advise a person regarding situations in which a trust could be a good choice and in setting one up. It is also necessary to choose a trustee to manage the trust. The trustee may have discretion regarding when assets are distributed to beneficiaries, or there may be instructions in the trust such as allowing distributions when a beneficiary reaches a certain milestone.