Estate Planning- Should I Specifically Designate A Beneficiary To My Life Insurance Policies, Annuities and Individual Retirement Accounts?
The Law Firm of Pozzuolo Rodden, P.C., Philadelphia Estate Planning Lawyers, release the question of the month “Should I Specifically Designate A Beneficiary To My Life Insurance Policies, Annuities and Individual Retirement Accounts”?
First, you should always name a beneficiary. Not naming a beneficiary is a big mistake. If you do not name a beneficiary, then the applicable contract language will control. For example, when a person dies, his IRA most likely goes into his estate if he did not designate a beneficiary. All assets in the IRA must then be distributed within five years to the estate’s beneficiaries, eliminating any opportunity for tax deferral and potentially triggering a large tax bill. Not naming a beneficiary is similar to not leaving a will when you die – your property will go to someone, but maybe not the person you wanted it to go to.
Second, you should make sure to update your beneficiary designations and to name contingent beneficiaries where possible. Circumstances and relationships, such as marriage, divorce, birth and death, change and you must make sure to account for those changes in your beneficiary designations.
Third, you should take time to consider who or what to name as beneficiary as you can benefit from specific financial and estate planning aspects depending on who you name as beneficiary.
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