October 2026:
The MLO Minute: “The Importance of Beneficiary Designations” —
By Dennis McAndrews, Esq., Founder and Managing Partner Emeritus, and Lesley Mehalick, J.D., LL.M., Supervising Partner of Estates and Trusts —
Beneficiary designations are a crucial — yet overlooked — component of estate planning. These designations determine who receives important assets after death which often bypass the probate process entirely. By properly managing these designations you can ensure that your intended subjects of your legacy pass directly to chosen recipients consistent with your wishes.
Beneficiary designations legally determine who will receive assets like retirement accounts, life insurance policies, and annuities upon your death. Through these beneficiary designations, your assets directly transfer to these identified beneficiaries, and our experienced estate planning attorney will assist you to properly state these designations to satisfy your wishes.
Correctly maintained beneficiary designations also enable more expeditious transfer of these assets while preventing legal complications or family disputes. Without proper designations, these assets may be distributed according to rigid state laws governing decedent estates and contracts rather than your intentions, potentially — and sometimes tragically — leaving unintended recipients with your hard-earned resources.
Primary beneficiaries are the first in line to inherit these assets, while contingent beneficiaries serve as backup recipients if primary beneficiaries predecease you, refuse the inheritance, or are prohibited by law from receiving the assets. It is important to name both types of beneficiaries as it creates a kind of safety net by ensuring proper asset distribution if unforeseen circumstances occur.
Unfortunately, we too often see some common beneficiary designation mistakes which can have a significant impact on an estate’s distribution. Some examples include failing to update designations after a major life event (marriage, divorce, birth/death of beneficiaries), vague language in designating a beneficiary, failing to name contingent beneficiaries, overlooking a beneficiary’s special needs and the receipt of resource dependent public benefits, failing to coordinate designations with the overall estate plan, and failing to consider tax implications.
A regular estate planning review helps to identify and correct any potentially costly oversights. Such a review of beneficiary designations is part of effective estate planning by ensuring distributions which reflect your current intentions and family circumstances. This proactive approach prevents oversights that could undermine even the most carefully crafted estate plan.
Moreover, recognizing and addressing certain special considerations for complex situations is essential including where potential recipients are minors, persons with a disability, or where blended families are involved. In these cases, the use of trusts can be critical to protect the value of the assets, conform the transfer of wealth to your wishes, and protect the interests and welfare of the beneficiary.
Our highly experienced estate planning and estate administration team is well suited to assist you in the entire estate planning/administration process. We look forward to working with you and your family!
