One reason people in Texas may shy away from estate planning is because they consider it to be a bit of a morbid task. Another reason is because it can seem complicated and multifaceted, with one important aspect of estate planning involving beneficiary concerns. However, failure to focus on estate planning may mean that one's important assets will not end up in the hands of the people one wants to receive them.
Probate is a legal process designed to ensure that creditors are paid. The government essentially receives its proper share of taxes before the money is distributed to heirs following one's death. This process can be lengthy, with the settlement of an estate in this manner having the potential to take a year or more. Fortunately, money in specific accounts, such as IRAs, that is left to a beneficiary does not go through the probate process. This is why beneficiary designations are so important.
Another reason why naming a beneficiary is critical is because if there is no beneficiary named, the heirs must withdraw the money they have inherited and then pay taxes on this money within a five-year period. They are unable to stretch it so that it grows tax free until they reach their retirement ages. In the end, they could, therefore, be sacrificing thousands of dollars or more.
When it comes to addressing beneficiary concerns in Texas, knowing who to name as beneficiaries and how to name them as beneficiaries of certain assets can be tricky. Appropriate legal guidance, however, can make this process less stressful and help one to avoid costly mistakes. Through an applied understanding of the law, people can have peace of mind from knowing that their valuable assets will ultimately be given to the right parties in the events of their deaths.
Source: bankrate.com, "IRA beneficiary errors that can hurt your loved ones", Jennie L. Phipps, May 6, 2016