While beneficiary designations play a pivotal role in estate planning, there are common errors individuals commit when relying solely on them.
Common Errors with Beneficiary Designations:
The initial mistake involves designating minor children as beneficiaries on accounts. Despite the intention to secure the financial well-being of children, minors cannot inherit outright in Missouri. Instead, the funds are held in trust by the court or a custodian, making access difficult until the children reach age 18. This lump sum at 18 may not align with most parents’ desires.
Another mistake occurs when individuals fail to update beneficiary designations post-divorce. Naming a spouse as a beneficiary is common, but it’s crucial to reassess after a divorce. Ensuring alignment between the named beneficiaries and your current intentions requires periodic reviews.
Neglecting to update beneficiary designations after the death of a beneficiary constitutes a third mistake. If a named beneficiary predeceases you, the assets might be pulled into probate in Missouri, complicating the distribution process.
Opting for a Trust as the Beneficiary:
Choosing a trust as an account beneficiary offers more control over the distribution of proceeds, accommodating various contingencies. The trust can appoint a responsible individual to manage and distribute funds for minor children or grandchildren, and a trust can provide for situations where a beneficiary passes away.
Secure Your Intentions:
Initiate a free initial consultation with one of our experienced attorneys to strategize an optimal setup for your beneficiary designations. Ensure that your hard-earned assets go precisely where you intend them to!