Facts about beneficiary designations in Michigan
Estate planning refers to the process of planning and organizing your estate, including all financial assets, investments, real estate holdings, business interests and personal possessions. Your estate plan should include provisions for who you want to receive your estate after your death. This is where beneficiary designations play an important role.
What are beneficiary designations?
Beneficiary designations are documents you fill out when opening certain accounts that specify who should receive the funds in the account after your death. Examples of accounts typically requiring a beneficiary designation include life insurance, retirement plans, such as an IRA or 401(k), annuities and bank accounts with payable-on-death (POD) language.
Anyone who has any of the accounts listed above should pay close attention to their beneficiary designations. Those who are estate planning or updating an estate plan should double-check that all account beneficiary designations match the estate plan to ensure that everything goes to the chosen beneficiaries.
Why are beneficiary designations important?
Beneficiary designations determine who inherits your estate and how quickly they receive it. In many cases, the money in a designated account goes directly to the named beneficiary or beneficiaries bypassing probate. Probate is a court process that can be time-consuming and expensive. So, naming the right beneficiaries can help ensure your estate is distributed quickly, efficiently and according to your wishes. Last but not least, it is important to remember that beneficiary designations supersede estate planning documents, such as a will or trust, so it’s important to keep them up-to-date.
To ensure your estate is distributed according to your wishes, it is important to review and update your beneficiary designations periodically, especially after major life events, such as marriage, divorce or the birth of a child. You can also contact the financial institution that holds the account to get help with updating your beneficiary designations.
Ultimately, estate planning is an important step in protecting your family and ensuring that your estate is distributed according to your wishes. Just remember that when making beneficiary designations, it’s important to choose primary and contingent beneficiaries. This means designating more than one person to receive estate assets in case the primary beneficiary is not available at the time of death.