Advanced Underwriting Consultants

CRAFTING THE CORRECT BENEFICIARY DESIGNATION

INTRODUCTION

 When clients approach their estate planning professionals to implement a plan, they expect the parts to work together.  Those of us who work in the estate planning business seek to do our best with lots of different objectives, managing 

  • family issues
  • control issues
  • taxes 

The sophisticated estate plan may involve use of lots of estate planning tools, such as revocable trusts.  The revocable trust creates advantages for the client, including avoidance of probate and efficient transfer of wealth to heirs.

 The beneficiary designation, while as sophisticated a tool as a revocable trust, is at least as important.  Those of us in the financial services business most commonly see beneficiary designations for

  • life insurance
  • annuities
  • pensions and IRAs

 A specific beneficiary designation allows the property to pass directly to the beneficiary without the need for probate.  Its effect generally supersedes anything that a will or trust might say.  At the death of the insured or account holder, the beneficiary simply produces the death certificate, and the beneficiary immediately vests in the benefit.  That direct and nearly immediate access is a powerful estate planning advantage.  And in most cases, the amounts paid directly to a beneficiary are not subject to the claims of creditors of the decedent.