A beneficiary designation is a way for you to pass your assets on after you die. Here are some common estate planning mistakes that Minnesota residents make when they’re getting their affairs in order.
You’re not always covered with a will alone
One popular misconception about a will is that it gives you total control over your assets, providing everything you need to pass them all down once you’ve died. However, there are various types of assets that are transferred via beneficiary designation and not through the will, so it’s a good idea to factor this into your estate planning.
Beneficiary designation gives you the choice to file paperwork with the financial company that holds the asset, naming the person you want the asset to go to upon the event of your passing. This includes life insurance, annuities and retirement accounts. When a financial company gives you the option to name your beneficiaries on a non-retirement account, it’s called a transfer-on-death (TOD) or pay-on-death (POD) account.
It’s up to you to ensure this happens correctly so that everyone gets their assets as you intended. You can start by making sure that all forms are filled out correctly before you give them to the financial company. You can never double-check too many times because any discrepancy may invalidate your beneficiary designation.
Designate your beneficiaries sooner rather than later
One of the most basic mistakes in beneficiary designation is failing to name anyone as a beneficiary at all. This happens to a surprising number of people, some just because they didn’t know they were supposed to. Others procrastinated, forgot and waited until it was too late.
In the case of no beneficiary being designated, it will be up to the financial company to determine how your assets are distributed – and this might bear no resemblance to what you wanted. In the case of life insurance, proceeds usually go into a probate estate.
Take care when designating your beneficiaries because these mistakes add up quickly. It’s shockingly easy to miss something in this often daunting process. But if you keep your guard up and keep a few key things in mind, you’ll be able to designate your beneficiaries, ensuring all your assets go directly to who you want them to after you pass away.