Planning your will and figuring out your beneficiaries go hand in hand. Learn how to select beneficiaries for your will. We’ll tell you who you can pick, what contingencies you should have in place, and things that you should think about for each of your beneficiaries. Make sure your will is in the best place to distribute your assets among your loved ones and more.
Who Should You Select as a Beneficiary?
First and foremost, select the people you want to inherit. You should avoid designating a minor unless you are establishing a trust for them. Additionally, ensure that you are very specific. If you are designating a group of people, such as your children, you should have a plan in place for how the inheritance is to be split, and how that split will change in the event that a child dies.
Additionally, keep your beneficiaries up to date. If you get married or remarried, have more children, or have significant changes to your assets, you will want to make sure your will is updated to reflect that.
Who can you list as a beneficiary? You do have a lot of options, including some that perhaps you haven’t thought of:
- One or more people (family, friends, etc.)
- A trustee for a trust that you have established
- A charity or non-profit organization
- Your estate
Think About How an Inheritance Will Affect Potential Beneficiaries
When assigning beneficiaries, most people assume that any inheritance will be received positively. Don’t take this the wrong way, there are a few perfectly valid ways that an inheritance could negatively impact someone.
If the person receiving an inheritance is already utilizing Supplemental Security Income or Medicaid, an inheritance could lead to their benefits getting reduced or even suspended. Additionally, if you are leaving behind physical assets such as cars, houses, or property, then you want to ensure that the beneficiary is able to handle any ongoing maintenance, fees, taxes etc. It’s a good idea to include potential beneficiaries in your will discussion.
Can a Will Override Life Insurance Beneficiaries?
Your beneficiaries should match everywhere. In the event that your beneficiaries don’t match, the beneficiaries listed on any policies will take precedence over what’s stated in your will. Updating your beneficiaries is easy, but always make sure you update them everywhere.
Plan Contingent Beneficiaries
After your death, you can’t be certain how your beneficiaries are going to handle the situation. For this reason, it is important to plan for contingent or secondary beneficiaries that will go into effect if a beneficiary has passed or is unwilling to participate in the process.
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