Estate Planning, Probate, Guardianship & Elder Law

Your Family. Our Purpose.

  1. Home
  2.  » 
  3. Estate Planning
  4.  » Why beneficiary designations matter
Mary Beth Kelly

Why beneficiary designations matter

On Behalf of | Jan 5, 2021 | Estate Planning |

It takes time and hard work to create wealth, yet a simple oversight could leave your nest egg in the hands of someone you don’t intend, like an ex-spouse or estranged relative. The start of a new year is a good time for resolution and for tidying up your affairs. Updating your beneficiary designations in Florida is a simple task that should take no more than an hour.

Retirement accounts need named beneficiaries

When you assign named beneficiaries to your retirement accounts, it makes the transfer of those funds clear, simple and fast. On the other hand, if your information is out of date, your family could end up in a Florida probate court trying to settle a will contest. Retirement accounts, such as IRAs, 401(k), and 403(b)s, are the kinds of accounts that need a named beneficiary.

Named beneficiaries on accounts take precedence over other documents, such as wills. However, if an account exists with no named beneficiaries and there are no other documents, like a custodial agreement or will, then the account will become subject to probate.

Types of beneficiary designations

You can name three different types of beneficiaries to your accounts. These are tertiary, contingent and primary. The primary beneficiary is the first person to receive the assets, such as a spouse. Contingent beneficiaries are the next in line to receive assets if the primary beneficiary dies, and tertiary beneficiaries are third. If you choose to name more than one beneficiary, you will need to detail the percentage amount for each beneficiary.

A financial planner or an attorney with a background in estate planning may help you identify which of your assets require a named beneficiary. Your attorney may also help you to create an overall estate plan that aligns with your wishes.