Beneficiary Mistakes You Don’t Want to Make
Any assets held in your estate at the time of your death will likely be subject to probate. New Jersey probate is a simple process that should be completed in one month’s time, assuming that no one launches a preemptive challenge to the Will, called filing a Caveat, or there if there is a problem with the Will itself, which requires a proceeding in Superior Court. Other states have a more complicated and time-consuming system for probating a Will.
Don’t Forget to Designate a Beneficiary for your Pre-tax Assets
Perhaps the biggest mistake that people make is to not name or update a beneficiaries for their 401k plans, individual retirement accounts (IRAs) or other pre-tax accounts. For many people these assets hold a significant amount of a person’s wealth and the income tax consequences as well as the practical consequences as to who receives those accounts can be problematic. Where a person has not designated a beneficiary, the account will most likely be paid to your estate and its’s disposition controlled by your Will. However, negative income taxes to your beneficiaries may result from not naming a beneficiary. Also people forget to check their beneficiary designations and their assets may pass to persons that they do not wish to currently benefit
Not Everyone Can Inherit Property
Minors are not allowed to own property in their own name. Therefore, , if an asset is left to a minor and the decedent does not name a trustee for that minor, the funds may either be held by the County Surrogate or a Court may decide when and how they will be held. Moreover, the assets will most likely be distributed to the minor when he or she reaches the age of majority. The ideal situation is to have a Will that directs that assets for a minor are to be held in trust for that minor until they reach a certain age. An estate planning lawyer may provide more insight into the differences between a will and a trust.
Consider Naming Alternate Beneficiaries
If a beneficiary predeceases you, any assets earmarked for that person may revert back to your estate. However, if you name an alternate beneficiary, an item will likely flow to that person instead. As a general rule, you can name as many alternate beneficiaries as you like, assuming that they are all capable of owning or managing assets on their own.
Review Beneficiary Designation Forms for All Other Assets
Life insurance policies and other financial assets often have beneficiary designations attached to them. Instead of going through probate, the asset will be transferred directly to the person listed on the designation form upon your death. However, it is important to note that a beneficiary designation form trumps anything written in your will.
Therefore, it’s important to review such a document on a regular basis to ensure that it reflects your true wishes. Otherwise, there is a chance that a bank account or life insurance death benefit could go to a former spouse or estranged adult child instead of to your intended recipient.
It’s often recommended that you review your entire estate plan at least once a year or after a major life event, such as a birth or death in the family. Doing so may also allow you to catch other issues before they make it difficult or impossible to carry out your final wishes.
Provide Clear Instructions
Assets will be transferred to the name of the person listed in your will, trust, or beneficiary designation form. If there is any question as to the identity of a beneficiary, there is a chance that assets won’t be transferred in a timely manner. For example, this may happen if a beneficiary changes his, her or their legal name and you do not update your beneficiary designations to reflect those changes. In such a scenario, you are encouraged to change the person’s name on other estate planning documents as well.
Issues might also arise if you have multiple family members who share a name or who have similar names. For example, if your uncle and cousin are both named Mark Jones, it may be worthwhile to write Mark Jones Sr. or Mark Jones Jr. on estate planning documents to avoid confusion.
If you are in need of a New Jersey estate planning lawyer, the experienced attorneys ar The Knee Law Firm in Hackensack may be able to help. You can get in touch with us by calling 201-996-1200 or leaving a message through our site.