Be Careful When Naming Beneficiaries
Ilion & Rome, NY – Naming beneficiaries on assets like life insurance and retirement accounts seems pretty straightforward. However, ignoring a couple of key issues can result in unintended consequences, according to Chris Bray, a partner at Rheinhardt & Bray, PC, attorneys in Ilion and Rome.
Suppose the beneficiary is in a nursing home on Medicaid or is disabled and receiving Supplemental Security Income. If that person receives life insurance proceeds or an IRA as a direct beneficiary they are likely to lose or see a reduction in benefits. Instead of naming that person directly, naming a supplemental needs trust can make sure that those funds actually go to help the beneficiary.
Bray also points out the importance of taking into account that a beneficiary may not be living. Many people suppose that if a child beneficiary is deceased, his or her share will go to the grandchildren. That may be the intent, but it only happens if the beneficiary form is properly completed. Otherwise a person might end up unintentionally disinheriting grandchildren.
Designating beneficiaries is an important part of sound estate planning. Failure to do so properly may result in unintended and undesirable consequences.