Avoiding mistakes with beneficiary designations

An Ohio resident who remarries might intend for the new spouse to receive the funds in a retirement account after their death, but a failure to change the beneficiary designation could leave those funds in the hands of the former spouse instead. There is little remedy for such a mishap once the owner of the account dies. Unfortunately, an account owner might even think that the matter is handled by a change in a will or trust.

During the process of preparing estate planning documents, a person might address concerns such as those who will benefit from retirement accounts and life insurance policies. In many cases, an individual would want these funds to be passed on to a spouse to ensure that the other partner’s needs are met after they are gone. However, it is important to understand that even if a will or trust includes directions for the distribution of such accounts, the beneficiary designation made on the account will be the determining factor on how the asset is distributed.

An individual who wants the funds from a retirement account to go into their trust could designate that trust as the beneficiary. This could help to facilitate management of funds so that they can be given to heirs over time, especially if those heirs might not be aware of management strategies for minimizing tax implications. For those whose estates could have significant tax burdens, a charity might prove to be an appropriate beneficiary on certain accounts.

Because the strategies for optimizing beneficiary decisions can often depend upon the size of an estate and the potential circumstances of those named, reliable legal counsel can be an important part of coordinating various facets of an estate plan. A lawyer may also assist with periodic reviews of those designations to ensure that they reflect a client’s wishes.