The Importance Of Beneficiary Designations: Conclusion

DO NOT take the advice of the clerical staff at the financial institution about whom you should designate as a beneficiary. They really don't know all of the ramifications. Follow the directions given by your attorney. If you run into problems, consult the attorney.

DO NOT name minors as beneficiaries of any contractual benefit. If you die while they are still minors, they will not be able to access the benefit without the expensive and burdensome procedure of having a court appointed guardian. You may use language in your beneficiary designation to allow your Executor to name a custodian of the property of any minor beneficiaries under the Pennsylvania Uniform Gifts to Minors Act, therefore avoiding a court appointed guardian. It can take over fifty words to state it correctly. You should consult an attorney to articulate such a designation.

DO NOT name a child with special needs as a beneficiary. This can cause the child to lose government benefits. Plan benefits should be payable to a special needs trust.

DO NOT put banks accounts and other assets in joint names to "avoid probate" unless your attorney directs you to do so. You could be destroying a carefully crafted estate plan and unwittingly exposing assets to claims and taxes.

Beneficiary designations for retirement plans and IRAs are in a world unto themselves. First, the pay-out options provided by the particular plan must be determined. Then the income tax and estate tax repercussions must be taken into account. If qualified plan benefits or IRAs are a substantial part of your estate, you need to have the help of a financial professional who is familiar with these matters.

Cheers!

Patti