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.
Avoid Directly Naming Those Reliant on Public Assistance
If certain heirs rely upon needs-based public benefits, naming them as beneficiaries on assets could cause them to lose the support they need. Government programs like Medicaid, SSI, and housing assistance impose strict income and asset limits.
Why should you never name a minor child as a beneficiary of your life insurance policy? Because they will not have access to it until they are 18 years of age. Instead, it will be supervised by the probate court until the child is 18 years of age.
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.
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.
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.
Regardless of what your will says, whoever is named as the designated beneficiary on each account will receive that asset.
Naming Your Child as a Beneficiary Can Saddle Your Child's Guardian with Burdensome Legal Obligations. The guardian of the property has many legal obligations. This person must obtain permission from a judge to buy and sell certain assets and may be required to obtain permission before using the money for the child.
Note that the preferred beneficiary status does not apply to siblings.
Ways an Executor Can Override a Beneficiary
For example, the executor may decide to sell estate property that one or more of the beneficiaries were hoping to receive as part of their inheritance.
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.
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.
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.
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.
Surviving Spouse and Child Beneficiaries. If you are married and have kids, you will likely name your spouse and children as policy beneficiaries. The death benefit you leave them can be a significant financial change.
When you enroll in a 401(k), you need to name beneficiaries to inherit your 401(k) if you die. Naming beneficiaries can keep your 401(k) out of probate court. You can name almost anyone as your beneficiary. such as your children, your parents, siblings, a friend, or your favorite charity.
An executor/administrator of an estate can only withdraw money from a deceased person's bank account if the account does not have a designated beneficiary or joint owner and is not being disposed of by the deceased person's trust.
A disclaimer is an heir's legal refusal to accept a gift or a bequest. The disclaiming party does not have the authority to direct who inherits their share. If you properly execute a disclaimer, the asset disclaimed will pass to whoever would have received it had you died before the person who left the asset to you.
Beneficiary Rights and Accounting
According to California Probate Code section 10950, if more than a year has passed since the beginning of probate administration and an accounting has not been filed, interested parties are entitled to file a petition with the court to make the executor to complete an accounting.
No, the oldest child doesn't inherit everything. While it will depend on state laws, most jurisdictions consider all biological and adopted children next of kin, so each child will receive an equal share of the estate, regardless of age or birth order.
While executors have discretion in some areas, your core decision-making is bounded by: The deceased's will. You must follow their distribution wishes rather than diverging based on your own judgments.
If one sibling is living in an inherited property and refuses to sell, a partition action can potentially be brought by the other siblings or co-owners of the property in order to force the sale of the property. In general, no one can be forced to own property they don't want, but they can be forced to sell.