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.
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.
Can there be more than one primary beneficiary? Yes. If the policyholder would like to name multiple beneficiaries to a single policy, he or she can specify any number of “co-beneficiaries.” When multiple beneficiaries are listed, insurance companies can split the same death benefit amongst them.
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.
The answer might be to your spouse, your children or grandchildren, your go-to charities or a combination of the above. You'll also want to consider whether you'd like to provide for outright distributions to the beneficiaries or, for larger inheritances, leave funds in a trust to allocate the assets over time.
Beneficiaries can be either primary beneficiaries (who are named in the trust deed) or general beneficiaries (who often are not named individually). General beneficiaries are usually existing or future children, grandchildren and relatives of the primary beneficiaries.
The primary beneficiary is the person or persons selected to receive the death benefit (contributions and interest) in the event of your death. The contingent beneficiary is the person or persons selected to receive the benefit if the primary beneficiary is not alive at the time of your death.
If your sole primary beneficiary passes away, the death benefit would go to any contingent beneficiaries you named when you applied for your policy. In the event you didn't designate any contingent beneficiaries, the death payout would likely go directly into your estate.
No matter how many primary beneficiaries you have, the total percentage allocated must equal 100%. How you divide that 100% is up to you, the policyholder.
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 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.
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.
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.
When one of multiple beneficiaries die. If one of the primary beneficiaries dies, the policy proceeds would be split among the remaining primary beneficiaries or the deceased beneficiary's dependents, if applicable. Otherwise, it would fall to contingent beneficiaries.
In most cases, the estate goes to the surviving parent, and the law determines how it's split between the parent and child. However, if there is no surviving parent, then the entire estate typically goes to the biological or adopted child.
If the estate does not have sufficient funds to fulfill these financial obligations, beneficiaries' inheritances could potentially be reduced or eliminated.
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.
If you are the designated beneficiary on a deceased person's bank account, you typically can go to the bank immediately following their death to claim the asset. In general, there is no waiting period for beneficiaries to access the money; however, keep in mind that laws can vary by state and by bank.
If the beneficiary name is incorrect, your transfer will not go through and the money will be returned to the original bank from where it was transferred.
In the overwhelming majority of cases, it is our recommendation to our married clients that they name their spouse as the primary beneficiary of their retirement account and name the Trust as the second or alternate or contingent beneficiary.
Selecting the wrong trustee is easily the biggest blunder parents can make when setting up a trust fund. As estate planning attorneys, we've seen first-hand how this critical error undermines so many parents' good intentions.
A trustee typically has the most control in running their trust. They are granted authority by their grantor to oversee and distribute assets according to terms set out in their trust document, while beneficiaries merely reap its benefits without overseeing its operations themselves.