How do you make sure that proceeds go to a named beneficiary?


Quick Answer

To be sure a named beneficiary get proceeds owed to her, use a current form, keep the forms updated and establish controls for heirs who are minors, says Bankrate. If a child is the beneficiary and not financially responsible when the parent passes, there can be issues with how to handle the estate.

Continue Reading

Full Answer

The forms used when naming a beneficiary must be updated and current, according to Bankrate. If someone names a spouse as a beneficiary on an IRA or another account shortly after getting married, and that couple later divorces, the former spouse may still end up with proceeds from the estate. After each life event, such as a marriage, divorce or birth of children, update the forms for the new situation. Some beneficiary forms take precedence over beneficiaries named in the will, including IRAs.

It is also advisable not to name an estate as beneficiary, says Bankrate. Naming an estate instead of a specific person as a beneficiary means the estate goes into probate after someone passes. This is a long process that may keep the potential beneficiary from receiving what is owed to her.

With a will and other beneficiary forms, be sure to name an alternate, recommends Nolo. If the beneficiary named does not survive, the estate may go into probate or to another heir that the person did not originally intend to get these proceeds. Naming a secondary beneficiary prevents this.

Learn more about Financial Planning

Related Questions