The Importance of Understanding the Need for Proper Beneficiary Designations in Estate Planning

By Joan Graner, Esq., Attorney in the Estates & Trusts Department

 

As attorneys well versed in estate planning and administration, we often come across situations where a deceased individual did not properly designate the beneficiary of a financial policy or account, i.e. life insurance, individual retirement account or investment account.  Failure to properly identify a beneficiary can derail or undermine your carefully considered estate plan.

 

To illustrate how such failure can impact your estate plan, consider the following: A husband and wife have Wills that create a trust for the benefit of their children under 25 years of age and intend the trust to be funded by their retirement accounts. It is critical that the testamentary trust be identified as the beneficiary of those retirement accounts.  If they do not update the beneficiary designation, the trust will not be funded, and the proceeds of their retirement account will be distributed to the named beneficiary.

 

This becomes particularly important with respect to a Special Needs Trust. It is imperative that you properly list the Special Needs Trust as the beneficiary of any account you intend to use to fund that trust so that it is properly funded, and the disabled individual maintains their public benefits.

 

Please contact McAndrews, Mehalick, Connolly, Hulse and Ryan, P.C. and ask to speak with one of our estate planning attorneys if you have questions about your estate planning needs. Click here to contact us today!