Estranged relatives or former spouses – Family relationships can be complicated, so think carefully if an estranged relative or ex-spouse really aligns with your wishes. Pets – Pets can't legally own property, so naming them directly as beneficiaries is problematic.
If you're married with kids, naming a spouse as a primary beneficiary is the go-to for most people. This way, your partner can use the proceeds of the policy to help provide for your kids, pay the mortgage, and ease the economic hardship that your death may bring.
Yes, you can name anyone you want as a beneficiary of your insurance, subject to whatever limitations the insurer might have. The insurable interest issue only comes up in regards to someone buying insurance. So your friend can't buy his own life insurance policy on your life.
If you are unmarried, consider choosing a close family member like a parent, sibling, cousin, or child. 2. You may want to consider your potential beneficiary's needs. An easy way to select a beneficiary is to also take into consideration your potential inheritor's needs.
Immediate family as beneficiaries
Anyone who will suffer financially by your loss is likely your first choice for a beneficiary. You can usually split the benefit among multiple beneficiaries as long as the total percentage of the proceeds equal 100 percent.
A lot of people name a close relative—like a spouse, brother or sister, or child—as a beneficiary. You can also choose a more distant relative or a friend. If you want to designate a friend as your beneficiary, be sure to check with your insurance company or directly with your state.
More often than not, people select their spouse as their primary beneficiary, and then name their children as contingent, or secondary, beneficiaries. However, the age of your children will likely come into play here.
For example, if a person names their estate as a beneficiary of their life insurance policy, not only does this put the asset into the jurisdiction of the probate court, but it also subjects the funds to your creditors and may be used very differently from what you had in mind.
Ineligible Beneficiaries: Minors: Generally, minors (individuals under the age of 18 or 21, depending on the jurisdiction) cannot be named as direct beneficiaries of a life insurance policy. In such cases, a trust or custodian may be designated to manage the proceeds until the minor reaches the age of majority.
While often money that is inherited during a marriage is considered marital property, with proper estate planning you can ensure that your legacy is left to your children and their children, and not to their spouse due to a potential future divorce or death.
If you're not married you can choose anyone to be your beneficiary. However, if you're married, or are planning to get married, please be aware that by law, your spouse is your default beneficiary, regardless of who you may have been your beneficiary before getting married.
Yes. Banks may require the beneficiary to provide a Social Security number (SSN) for monetary transactions. This requirement is intended to verify that funds are distributed to the correct designated individual(s) listed in a will, trust, insurance policy, retirement plan, annuity, or other contract.
Name both primary and contingent beneficiaries.
It's a good practice to name a “back up” or contingent beneficiary in case the primary beneficiary dies before you. Depending on your situation, you may have only a primary beneficiary.
The primary disadvantage of naming a trust as beneficiary is that the retirement plan's assets will be subjected to required minimum distribution payouts, which are calculated based on the life expectancy of the oldest beneficiary.
While many people focus on creating wills, trusts, or retirement accounts, ensuring that your bank accounts have designated beneficiaries can provide an extra layer of protection for your loved ones and help them avoid unnecessary delays in accessing your assets after your death.
Not all bank accounts are suitable for a Living Trust. If you need regular access to an account, you may want to keep it in your name rather than the name of your Trust. Or, you may have a low-value account that won't benefit from being put in a Trust.
The contract will go into probate if there isn't a beneficiary on file. A will would provide instructions to probate court of the wishes of the deceased. The probate process can vary depending on state law.
Frequently, many choose to name a minor as the beneficiary of a retirement account. You could name your children (if you're a single parent), your grandchildren, or a friend or relative. Even if you don't name a child as your primary beneficiary, you may want to name one as a secondary beneficiary.
Most life insurance policies will not allow you to directly leave money to beneficiaries who are minors. If you name a minor as a beneficiary, they will have to settle the matter in probate court. In which an adult will be delegated to manage the money until the minor is old enough to be responsible for it themselves.
The beneficiary can use the money as they see fit and is not required to split life insurance with siblings or other family members. However, there are situations where siblings may challenge the distribution of life insurance benefits.
It's generally a bad idea to name more than one beneficiary, for two reasons. First, if you name your spouse and someone else as beneficiaries, your spouse loses the special benefits and flexibility they would otherwise have. Second, it complicates things.
No Beneficiary on Bank Account
If there is no beneficiary listed on the bank account, the account typically goes through probate, and the funds will be distributed according to the deceased's will or state laws if there is no will.
A primary beneficiary is a person or entity named to receive the benefit of a will, trust, insurance policy, or investment account. More than one primary beneficiary can be named, with the grantor able to direct particular percentages to each.