Named beneficiaries should be a part of your Michigan financial preparedness plans if you wish to leave specified assets to particular individuals. This post will discuss the role of beneficiaries in more detail.
Purpose
A beneficiary is a named individual you designate in a will or financial document as a recipient of all or part of your estate after your death. Named beneficiaries are essential to estate planning, and you should include them in a will. The probate court distributes your assets in accordance with state intestacy law if you die without a will.
You should also designate beneficiaries on all your bank and brokerage accounts, pension plans, trusts and insurance policies. Periodically review these and replace anyone who has died or fallen out of favor. Keeping a copy of your beneficiaries’ contact information with your financial records is also a good idea.
Types
The primary beneficiary will receive the designated asset if the executor of your estate can locate them. A contingent beneficiary is next in line if the primary is dead, cannot be found or refuses to accept the asset. Include a contingent beneficiary in your will.
Advantages
Financial accounts and trusts with named beneficiaries are settled quickly without probate, which can be expensive and lengthy. By-passing probate means the estate spends less on settlement, so more money is available for your beneficiaries. In addition, heirs cannot challenge account beneficiary designations the way that they can if they overturn a will’s directives.
Since there is no downside to including named beneficiaries on your accounts and in your will, review your paperwork and revise it as needed. Your loved ones will thank you.