By: Skyler D. Steckler, Esq.
When a person thinks about where they want their assets to go once they pass away, they will usually consider hiring an attorney to draft a Will, or maybe a Trust, to ensure that their wishes get carried out. However, one major step that many people overlook is designating beneficiaries on assets when it is possible to do so.
Designating a beneficiary directs an asset to pass to the designated person upon death without probate. No matter what a Will states, a beneficiary designation takes precedent. Assets controlled by a Will are required to go through probate to pass to the intended beneficiary. With a beneficiary designation, all the beneficiary needs to do is provide proof of death, generally through a death certificate, to access the asset.
A person can designate beneficiaries on many different assets, including retirement accounts such as 401(k)’s, IRA’s, Roth IRA’s, pensions and more. Sometimes, an asset may not refer to a “beneficiary designation,” but will allow for something similar. For example, many banks will allow a person to designate someone as a “pay on death” recipient, allowing that designated person to access the money in the bank account when the account holder passes away, much like a beneficiary designation on a retirement account.
Many assets will allow for both a primary beneficiary and a contingent beneficiary in case the primary option is unable to claim the asset. Naming one or more contingent beneficiaries can help minimize the risk that the asset will end up passing through probate.
If done properly, beneficiary designations can be extremely helpful in both allowing intended beneficiaries to access assets more quickly upon a person’s death and also reduce the need for probate. However, some assets cannot have beneficiaries and thus are likely to require probate. Examples might include homes with a single owner, vehicles, and stock certificates in the decedent’s name. Therefore, it is still important to have a Will, and maybe even a Trust, to ensure that your assets pass smoothly upon your death.
Skyler is an Associate Attorney at the Law Offices of Miller & Chaet, PC. 678-746-2900 NorthFultonWills.com