When you buy a life insurance policy or open up an investment account, you have to name a beneficiary for those assets. Naming beneficiaries seems pretty straightforward. However, it is something you should consider very carefully in your estate planning. Conflicts in your planning can cause chaos later on.
Married couples often name each other beneficiaries for asset accounts and insurance policies. In fact, under Texas law, if you want to name anyone other than your spouse as a beneficiary, you have to get your spouse's written consent. Here are some other situations you should consider.
What If You Leave All Assets To One Beneficiary, But Your Wishes Are To Divided Them Equally?
Trusting that one person will do the right thing is a major gamble when it comes to estate planning. And that trust is too often misplaced. Many of the conflicts that arise in probate court come from what the deceased said in person and what that person's will and beneficiary designations were.
If your will and beneficiary designations leave all your assets to one person, that person is the legally recognized heir. Even if you wanted that person to divide everything equally among other people, he or she is not legally obligated to do so.
It is far better to make your beneficiaries clearly known than take such a gamble.
What If Your Will Conflicts With Your Beneficiary Designation?
You just got a divorce and have no kids. You redo your will and name your brother as your sole heir. However, you have a life insurance policy that names your ex-spouse as its beneficiary. You forget to change the policy's beneficiary designation but keep the policy active. A few years later, you pass on and your estate goes into probate. Would your brother or your ex-spouse get the proceeds of that policy?
In most cases, your ex-spouse would get those proceeds. Probate courts generally view specific beneficiary designations on insurance policies or asset accounts as overriding any designation made in your will.
Can You Name A Trust As A Beneficiary?
You can name your trust as the beneficiary of your life insurance policy. Your spouse will have to consent to the designation.
A trust offers certain advantages when it comes to passing on assets to your heirs. It can help care for minor children and pets. It gives you more control over how the money is distributed. It keeps the money protected from creditors. It brings certain tax benefits.
As you can see, naming beneficiaries is not as straightforward as you might think. You need the professional advice of estate planning experts. Call on Stockard, Johnston, Brown & Netardus, P.C. in Amarillo, Texas.