People in Texas sometimes avoid estate planning because they prefer not to bring up the topic of death. Still, an estate plan plays an essential role in the distribution of a person’s assets in the event of his or her passing. Identifying beneficiaries is a critical part of the estate planning process.
The designation of beneficiaries for one’s assets is a simple yet often overlooked method of maximizing an estate plan’s efficiency. Beneficiaries can be named for particular assets, including retirement accounts, bank accounts and insurance policies. By naming beneficiaries, a person can ascertain that these types of assets are expeditiously transferred to the appropriate parties.
An asset that is designated to a beneficiary transfers similarly to an asset that is held in trust, as it will not be subject to the probate process. This is a significant benefit because probate is time consuming and potentially costly. People can also achieve some flexibility by choosing multiple beneficiaries and then determining what proportion of their assets will be distributed to each of these beneficiaries.
When identifying beneficiaries, a person can name a primary beneficiary as well as a contingent and a default one. Primary beneficiaries take precedence, while contingent beneficiaries are second in line. Default beneficiaries exist to take assets if the primary and contingent beneficiaries are unable to do so. Default beneficiaries are usually charities or trusts rather than people. Proper legal guidance can help people in Texas to complete estate planning in a manner that satisfies their wishes and meets the needs of their intended beneficiaries.
Source: wealthmanagement.com, “Beneficiary Designations: Easy and Often Overlooked“, David H. Lenok, Oct. 9, 2015