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life insuranceIf you’ve established a will or trust, you’re probably familiar with the term “beneficiary designation.” A beneficiary is any person or entity to whom you designate control of your finances and possessions in the event that you pass away. However, when it comes to determining whom to designate on your financial documents, there are three common mistakes you should avoid:

Mistake #1: Assuming your will is the final authority. A beneficiary designation trumps what’s written in your will. In other words, if your will says one thing and the beneficiary says another, your beneficiary has the final word. So, be sure to designate a beneficiary whom you trust to respect and carry out your wishes.

Mistake #2: Naming your minor children as beneficiaries. In most states, if an individual is under 18 years old, they won’t directly receive the proceeds of your estate. If you haven’t officially designated an of-age guardian or relative to handle these on your children’s behalf, the courts will likely appoint someone, which, in addition to being costly, may result in unintended consequences.

For example, let’s say you’re divorced and don’t want your ex-spouse handling the funds for your kids. If you haven’t designated an adult beneficiary, the state will likely give the funds to the remaining parent on the children’s behalf. Granted, your ex-spouse has to submit an annual report to prove they’re handling those funds properly, but it can still be a little dicey. So, make sure you designate someone you trust to handle your children’s inheritance until they’re of age.

Mistake #3: Putting your beneficiary designations on “auto pilot.” In addition to wills and trusts, things like qualified plans and life insurance policies have beneficiary designations, as most companies require that you put one down. However, since life circumstances tend to change over time (divorces, deaths in the family), it’s important to periodically review your beneficiary designations every three to five years.

Have questions regarding your life insurance policy? Contact us at (888) 512-8878 or email Carl by clicking his email address below.

Original Article:

By Carl Lundgren
(415) 883-2525

Posted 9:44 AM

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