Florida Estate Attorney: Beneficiary Designations Important

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Florida Estate Attorney: Beneficiary Designations Important

As a Florida Estate Attorney, I can tell you that one of the most common mistakes people make is not paying enough attention to their beneficiary designations. Everyone knows how important it is to have a Revocable Living Trust or a Last Will and Testament, but they seem to believe that their estate planning checklist should end right there.

Unfortunately, what most people don’t know is that a Will doesn’t overrule designations on things like CDs, life insurance policies, 401(k)s, IRAs, and other kinds of retirement accounts. If you originally listed a parent or sibling as your beneficiary because you didn’t have your own family at the time, that person will still get the money even if you specify in your Will that your spouse or children should get everything.
Other mistake people make include things like:

  • Naming no beneficiary
  • Naming an ex as a beneficiary
  • Naming an “estate” as a beneficiary
  • Directly naming a minor as beneficiary instead of setting up a trust for them
  • Naming a trust that is outdated or doesn’t exist
  • Neglecting to list a secondary or contingent beneficiary

Florida Estate Attorney: Who to List and How to Do It

For the most part, knowing who to list is pretty simple. You want your beneficiary designations to reflect the people that you currently want to receive your assets, or you want the money to go towards paying off taxes, debts, or other expenses.

People with families of their own typically should designate their spouse as their beneficiary—especially if their children are under 18. Alternatively, they might have the money go to a trust for their kids until they are adults. Adult children can be designated as beneficiaries but this is usually only if the other parent has already passed. Other relatives and even friends can be listed, but that is less typical.

If you want to use your assets to pay off debts and other expenses, the designation should name a Trust that you’ve set up with your Florida Estate Attorney. You may also wish to set up a Special Needs Trust if the person to whom your money will be going receives government assistance. Designating them as direct beneficiaries could disqualify them from their benefits but an appropriately drafted Trust will allow you to meet their needs without disrupting other aid.

All of this, as you might imagine, can be quite complicated, so it’s always wise to sit down with your lawyer and create an estate planning checklist. As part of this checklist, you want to make sure that you take a look at your designations every three years or each time you go through a major life change. An experienced Florida Estate Attorney can make sure your plan is sound.

Kathleen Flammia

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