Estate planning: Take care when naming beneficiaries on accounts

Any Texas resident may be able to benefit from strong estate planning — you don’t have to be rich to want to protect your heirs. In fact, you might be taking estate planning measures without even realizing it when you set up certain accounts or policies, such as savings bonds or life insurance. Keeping your overall estate planning goal in mind when selecting beneficiaries for such accounts can save future trouble and help protect your heirs.

Some mistakes people often make in completing beneficiary forms include naming a single minor or disabled person as the beneficiary. Sure, you want the assets to pass to your children, but if they are minors or are not capable of handling the assets for other reasons, you should make provisions on beneficiary forms and in estate plans. Name someone you trust to handle the money on behalf of the minor, or the court may do it for you.

Naming your estate as a beneficiary is a tactic that can help save on taxes and protect your assets, but it doesn’t work for every type of account. In some cases, the payout and tax structures related to an individual beneficiary are more flexible than those related to an estate.

In addition to choosing the right beneficiary when completing forms, it’s also a good idea to review beneficiary forms from time to time as estate needs change. If there is any reason to change your will, for example, you should probably review beneficiary designations to ensure they are in line with your new wishes.

Estate planning can get complicated, especially if you have multiple accounts and policies with different beneficiary forms. Third-party assistance can help you combine all the parts of your estate in a cohesive plan that protects your wishes and your heirs.

Source: The Wall Street Journal, “Beware the Beneficiary Form” Carolyn T. Geer, accessed Feb. 10, 2015