Kaplin Stewart

The role of the beneficiary within estate planning

Signing off on that last estate planning document is a wonderful thing. Many Pennsylvania residents feel a great sense of relief when the process is complete and are glad to have provided for the division of assets in the event of their death. That said, it is not uncommon for individuals to hold misconceptions about estate planning, one of which involves the power of named beneficiaries.

Many types of accounts require the holder to designate an individual who will receive the wealth held within that account upon the holder’s death. Examples include bank accounts, investment accounts and retirement savings vehicles. Employee benefits also ask for a beneficiary designation, such as deferred compensation agreements, stock options and employment contracts.

In the event of one’s death, the individuals named as beneficiaries on those accounts will receive the wealth held within. This is true even when a great deal of time has passed, and when the holder has drafted a will that excludes the individual from any other form of inheritance. Beneficiary designations are something of a trump card with estate planning, and they should be given proper consideration.

During the estate planning process, Pennsylvania residents should take the time to contact the administrator responsible for each account to determine who is the named beneficiary. Changing that designation is simple, but unless that step is taken, the person named as beneficiary will inherit the value of the account. Checking one’s beneficiary designations should be done at any point where a significant life event takes place, such as marriage, divorce or the birth or death of a child.

Source: wmur.com, “Money Matters: The trump card of estate planning“, Marc Hebert, May 21, 2015