lEGAl CoNCERNS
The majority of individuals
have a multitude of opportunities
to designate beneficiaries. Most
often beneficiaries are designated
in Wills, on policies of life insurance, and on retirement accounts.
No matter what you choose in your
Will, if you designate a beneficiary
on your insurance policy or retirement account, that policy or account will pass to the designated
beneficiary. In other words, if your
Will says that you leave everything
to your favorite niece, but your
parents are the beneficiaries named
on your life insurance or retirement
fund, your parents will receive the
life insurance and retirement.
Naming minor children as beneficiaries of life insurance is rarely
a good idea. A guardianship would
need to be established to manage
the funds during minority. These
Beneficiary Designations
Require Attention
types of “financial” guardianship
proceedings can be expensive, with
frequent reporting to a Court required. A better option is to name a
Trustee of a trust within your Will
to receive the proceeds and nomination of a Guardian for only the
physical care and custody of a child.
It is also important to periodically review any and all beneficiary
designations. Outdated beneficiary designations can occasionally
have devastating consequences.
For example, if a former spouse is
designated as the beneficiary of life
insurance, a second spouse and children will be left without any such
benefit. Likewise, leaving elderly
parents as beneficiaries of life and/
or retirement benefits can have
unintended consequences. Sadly,
all too often outdated beneficiary
designations remain in place.
Beneficiary designations are a
critical part of estate planning, both
in a Will or a trust, but also on policies or accounts. However, as time
goes by it is important to review,
reconsider and periodically update
all of your beneficiary designations.
Anne Hensley Poindexter, Partner
CAMPELL kYLE PrOFFITT LLP
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