Wills are a vital part of any estate plan. Wills designate guardianship of minor children and control the disposition of your property after death. Depending on the type of assets you have, a Trust may also be beneficial in avoiding probate and ensuring a smooth transition of your assets after death.
However, do not overlook beneficiary designations on accounts. There may be tax advantages to keeping certain types of accounts outside of your Trust and/or Estate and have them pass directly to beneficiaries. Such accounts include: IRAs, retirement plans and life insurance just to name a few.
A predeceased beneficiary on your account can cause issues when transferring that asset after your death, so it’s important to make sure that all beneficiary accounts contain the name(s) of contingent beneficiaries. Furthermore, make sure that the beneficiary’s personal information is current, including addresses and telephone numbers so the beneficiaries can be contacted about the asset after your death.
Finally, it is also important not to name minor children as beneficiaries on any account. A guardianship estate administered by the court will be created if the child is set to inherit the asset while still a minor. When the minor child turns 18, all assets will be distributed to the child. In most cases, parents do not want their teenaged children to receive substantial funds with no oversight as to how the money is spent. Ask yourself, what would you have spent money on when you were 18?
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