Naming beneficiaries may take some time as you determine who you feel would most benefit from your estate. In fact, as your life progresses, you may change who you have listed as beneficiaries.
Understanding some strategies for selecting beneficiaries, as well as which missteps to avoid can help you make thoughtful decisions about who to include in your plan.
Choosing people to benefit from your estate plan may seem simple enough. However, considering individual circumstances, maturity and responsibility can all aid you in making appropriate selections. According to State Farm Insurance, some things to consider prior to choosing beneficiaries include the following:
- Policy rules and regulations
- Insurable interest
- Beneficiary age
While the ability to manage finances is not required, selecting individuals who you trust to use an inheritance responsibly may guarantee the perseverance of your legacy.
Sometimes, changes to personal relationships may impact your estate plan. Namely, divorce, remarriage, death and adoption may all require you to modify your beneficiaries. Promptly addressing such modifications may prevent disappointment and confusion for your family that could accompany an unexpected turn of events after your death. For example, if you divorce but do not update your beneficiaries, your ex may still have the legal right to claim your assets. Making updates right away will keep your money in the hands of those you care about.
If you want to name minors as recipients on your plan, you will want to include provisions that prevent them from claiming their inheritance until they reach an appropriate age. If they come of age before you pass away, you can modify your plan to name them directly as recipients.
Inheritors to your plan have the unique opportunity to benefit from your success. They can also participate in your legacy which may give you a sense of pride and comfort. Using care as you choose your beneficiaries can help you make selections that will provide long-term satisfaction.