Beneficiary designations refer to the process of naming individuals or entities to receive certain assets or benefits after your death. These designations are typically made for financial accounts, policies, and plans, allowing the assets to bypass probate and transfer directly to the named beneficiaries.

Laws vary from state to state, but common examples of accounts and plans requiring beneficiary designations include:

  • Retirement accounts: Such as 401(k)s, IRAs, and pensions

  • Life insurance policies

  • Annuities

  • Payable-on-death (POD) bank accounts

  • Transfer-on-death (TOD) investment accounts

When you designate a beneficiary, you typically specify their relationship to you (e.g., spouse, child, or other relative) and their share of the asset. You can also name contingent beneficiaries, who will inherit the assets if the primary beneficiary predeceases you.

Key Benefits of Beneficiary Designations:

  1. Avoiding Probate: Assets with named beneficiaries generally transfer directly to them, saving time and avoiding the delays and costs of probate.

  2. Simplicity: Designating beneficiaries is a straightforward way to ensure your assets are distributed according to your wishes.

  3. Clarity and Control: Clearly naming beneficiaries reduces the likelihood of disputes among heirs.

Important Considerations:

  • Keep Designations Updated: Life changes like marriage, divorce, the birth of a child, or the death of a beneficiary may require you to update your designations to reflect your current wishes.

  • Align with Your Estate Plan: Beneficiary designations should complement your overall estate planning strategy. Discrepancies between your designations and your will or trust can lead to conflicts.

  • Tax Implications: Some beneficiary designations, such as those on retirement accounts, may have tax consequences. Consulting with an attorney or financial advisor can help you make informed decisions.

By carefully choosing and maintaining your beneficiary designations, you can ensure that your assets are transferred efficiently and in alignment with your goals. 

 

Sacramento Estate Planning, Tax Planning and Business Attorney.

I’m John Goralka, a Sacramento Estate Planning, Tax Planning and Business Attorney at the Goralka Law Firm, P.C. If you have an estate, tax or business situation needing legal help, contact our team for experienced and friendly advice. You can contact us at 916-440-8036. Alternatively, you can use our convenient online contact form here on our website. We listen, and you can have your questions answered, your case evaluated, and explore your options for getting the legal help you need. 

There are almost 200,000 attorneys in the state of California, and fewer than 100 of those attorneys are State Bar Specialists in Estate Planning, Trusts and Probate and State Bar Specialists in Taxation.  I am one of the few attorneys with both critical specializations.  I passed the California CPA examination and am a former income tax auditor and hearing officer.  I am also recognized as a top attorney in the United States by US News and World Reports and by Best Lawyers and hold an AV rating from Martindale which is the premiere rating organization for attorneys.  The AV rating is the highest possible rating for legal experience and for legal ethics.  

For help with estate planning, business planning or tax planning, please contact our office.