Beware the Beneficiary Form

By: Fredrick P. Niemann, Esq. an Estate Planning Attorney

This is the second post on the subject of beneficiary designations and their importance in New Jersey probate and estate planning.

Individuals, trusts, charities, other organizations, your estate, or no one at all can be named a beneficiary of your assets.  You might specify one or more people or name a specific group of individuals, such as “all my grandchildren who survive me.” This might include current and future grandkids and spare you from having to update forms as families change and grow.  However, it generally would not include step-grandchildren; they’d need to be designated specifically by name.

Avoid the tendency to choose a different beneficiary for each of your accounts.  One woman left her estate equally to her two daughters in her will, but named one daughter or the other as beneficiary of her various bank and brokerage accounts.  The result:  Just about all of her assets passed outside of her estate, and one daughter received much more than the other.

“That was very unpleasant for everybody.”  It would have been better, if the mother had named both daughters as beneficiaries of each of her accounts or not named anyone and allowed the assets to flow into her estate, where the assets would have been distributed according to her will.

Watch out, too, for beneficiary forms that don’t allow your assets to pass “per stripes,” or equally among the branches of a family.  Say you name your adult three children as beneficiaries of your IRA.  If one of them predeceases you, you might want that child’s share to go to his or her children.  However, many standard beneficiary forms provide that your two remaining adult children would share the proceeds to the exclusion of your deceased child.
For more information on naming beneficiaries on various institutional forms, please contact Fredrick P. Niemann, Esq. toll-free at (888) 800-7442 or email him at fniemann@hnlawfirm.com/

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