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Beneficiary Designations Are Crucial to Effective Transfer

Assets transfer at death through various modes. When a decedent leaves a trust with assets appropriately titled to it, the trust is administered, and the assets are distributed to the beneficiaries pursuant to its terms. When a decedent leaves only a will, the will must be probated under supervision of the Court, with the assets ultimately being distributed pursuant to court order. Certain assets transfer primarily by beneficiary designation and are not impacted by either a will or a trust. This is typically true of retirement assets and life insurance, in particular. Transfer by beneficiary designation is the simplest of the three processes described above.

However, all too often, we find that a person failed to update the beneficiary designations on their accounts. When this occurs, either the asset will be distributed by way of an outdated beneficiary designation, which may no longer be what the decedent had intended, or the account will require a full probate to be distributed by order of the Court. The probate process is public, tedious, and costly, and its avoidance is the primary purpose most clients complete estate planning to begin with. It is crucial, therefore, that people regularly review beneficiary designation forms with the account’s custodian and their estate planning attorney and make necessary revisions when appropriate. Your estate planner can assist you in strategic planning by identifying which type of assets should pass by way of various functions. For example, retirement assets should typically only pass by way of beneficiary designation to specifically named individuals. If a trust is named as beneficiary, serious negative tax consequences may occur pursuant to the Secure Act, which restricts the way we may manage stretching out required minimum distributions to achieve a beneficial tax result. Regular estate planning reviews can save your heirs much burden, expense and delay.

To ensure that your estate planning is up to date, contact our qualified estate planners today.

The material in this article, provided by Chauvel & Glatt, is designed to provide informative and current information as of the date of the post. It should not be considered, nor is it intended to constitute, legal advice or promise similar outcomes. For information on your particular circumstances, please contact Chauvel & Glatt at 650-573-9500. (Photo Credit depositphotos.com).


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