If you have an estate plan in California, you’re in good shape for protecting your family’s future. It’s especially important to be aware of beneficiary designations. Use these tips to ensure that assets go to the right people.
Name alternate beneficiaries
You have probably already named beneficiaries to receive certain assets and property, but it’s important to name alternates as well. Because of the unpredictable nature of life, it’s impossible to know what might happen in the future. Someone could die before you and not get to receive an inheritance. Naming alternate beneficiaries can correct that.
Consider age of majority
If you name a minor child as a beneficiary, you will have to specify the age when they will be able to receive an inheritance. Minors cannot directly get an inheritance, so you would have to set up a trust to hold what you intend to leave them before they reach the age of majority.
Update your beneficiaries
Aside from death, other major life changes occur that warrant updating your beneficiaries. This includes the birth or adoption of a child, getting divorced or getting remarried and having new stepchildren. If you divorce, you will want to take your ex-spouse off your estate planning documents. If you have a child, remarry or have new stepchildren, you will want to add them as beneficiaries.
Don’t name your estate
You should avoid naming your estate as a beneficiary on your workplace retirement plan or IRA. It could have significant tax implications that could cost you. You might want to learn more about the potential issues that could arise with taxes when transferring assets from these types of plans to a beneficiary.
Being mindful of your beneficiary designations can better help you prepare for the future and secure your estate.