When creating an estate plan, you and many other Colorado residents have many factors regarding your finances and assets to consider. While you could address certain pieces of property in your will as far as whom you want to receive each item, you could also assign beneficiary designations to certain accounts that you do not necessarily have to address in your will.
Various accounts have the option of appointing a beneficiary so that the funds or other assets can pass directly to the named person without having to go through probate. If you do not name a beneficiary, the funds will go to your estate and then will have to go through probate. The same goes for accounts that have outdated beneficiaries, meaning that the beneficiary cannot collect the funds for some reason, such as already having passed away.
Going over your designations
If you have not made any beneficiary designations yet, now may be a good time to go over your accounts to determine which may allow you to make these appointments. Commonly, bank accounts, savings accounts, retirement accounts, life insurance policies and similar financial assets are payable on death. This means that they allow accountholders to name beneficiaries to directly receive the funds after the accountholder’s passing.
If you inventory your financial assets and find that you have payable-on-death accounts, you may want to ensure that you name beneficiaries to those accounts. If you have already made those designations but some time has passed since you last reviewed them, going over them again could ensure that you have not changed your mind about a particular designation and that the named beneficiaries are still able to collect if needed.
Don’t forget to have back-ups
Even if you feel that your beneficiaries are in a good place currently, life could change significantly in a quick amount of time. As a result, you may want to name contingent beneficiaries who are essentially next in line if your primary beneficiary cannot collect the funds for some reason. This could better ensure that your accounts do not have to go through probate.
Overlooking beneficiary designations is easy to do when estate planning. However, it could be a major mistake if it happens. Your beneficiaries will play a vital role in your estate plan, so reviewing them periodically is wise.