Deciding how one should designate beneficiaries for an asset, such as an insurance policy or company retirement plan, in Texas may seem relatively straightforward. Individuals most likely prefer to designate people who are close to them as beneficiaries of any monies they have accumulated over their lifetimes. However, designating beneficiaries involves more than simply writing these people’s names on the correct forms.
It is important to first know the basics when it comes to naming a beneficiary. Beneficiaries may include not just people but also trusts and charities. When beneficiaries are named, one’s assets are passed directly to these parties. This means that the beneficiaries do not have to navigate the potentially costly and lengthy probate process.
Any designations of beneficiaries made for assets such as insurance policies will override any requests made in a will. For instance, even though a will might explain that a person wants his or her spouse to receive all of his or her assets, the person’s sibling may end up getting a piece of it if the person named his or her sibling as a company retirement plan beneficiary before getting married and forgot to change this designation after getting married. For this reason, it is essential to keep one’s designations up to date.
Naming a beneficiary in Texas is a process that is more nuanced that many people think. If not done correctly, it might have major repercussions for one’s loved ones. Proper legal guidance in Texas may help people to properly identify/name beneficiaries and set up well-thought-out estate plans, thus protecting their assets while also protecting the interests of their loved ones long term.
Source: morningstar.com, “How to Handle Beneficiary Designations“, Christine Benz, April 22, 2016