In this conclusion to our series on important terms in Michigan estate planning, we’re exploring the role of beneficiary and what it means when you’ve been listed as one on someone’s estate planning documents.
In simple terms, a beneficiary is someone who is set to receive some form of asset or other advantage either while the creator of the estate planning tool is still alive, such as through a trust, or after the creator passes away, such as through a will or a life insurance policy.
The primary beneficiary is the organization or person that you want to get the benefits payable from an account, policy, or trust. This is a very important right to choose exercised by the person creating the policy.
It’s also a good idea to have a contingent beneficiary. This is the person or persons who are eligible to receive the assets if the primary beneficiary is no longer alive.
Keeping beneficiary designations updated is extremely important. Many people who go through a divorce, for example, might forget that their former spouse is listed as the beneficiary on a broad array of tools like retirement accounts and life insurance. If that person is listed and something happens to you, they’re legally entitled to the full benefits as outlined on those policies or accounts.
It’s a good idea to look at all documents with beneficiary designations at least once a year so that you can ensure these materials reflect your current wishes and family makeup. Many documents with beneficiary designations pass outside of your will, meaning that it’s not enough to update your will.
Instead, turn to your Michigan estate planning lawyer at least once a year to discuss your options and plan ahead. Passing on assets through your beneficiary designations can be an easy process when you have the right lawyer guiding you. Schedule a meeting today to ensure you’ve covered all your bases with beneficiary designation.