Beware the Beneficiary Form (Part 2 of 4)

HNW Elder Law, Estate Planning

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

Who Can Be Designated a Beneficiary to Your Accounts and Property

You are legally entitled to name individuals, trusts, charities, organizations, or no one at all as a beneficiary of your estate. You’re also allowed to specify a group of individuals, such as “all my grandchildren who survive me” as beneficiaries. This group can include current and future grandkids to 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 when your goal is to treat beneficiaries equally.  One woman left her estate equally to her two daughters in her will, but named only one daughter 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 (855) 376-5291 or email him at fniemann@hnlawfirm.com.  Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.

By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Estate Planning Attorney

 

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