Naming a proper beneficiary makes all the difference when it comes time to distribute assets. While a will or trust may make your intentions clear as to what is to be done with your assets, these testamentary documents still interact with other pension plans, insurance policies, or forms of retirement income. As a result, a person who does not keep track of these policies may find that their wishes are not met.
Beneficiary designations in Naperville are key to proper estate planning. While the presence of a will or trust may seem like the entirety of an estate, in truth, named beneficiaries on separate legal documents may take precedence over the language in a will. An attorney could help to provide more information about beneficiary designations in Naperville estate planning.
A beneficiary is any party who stands to benefit when an insurance policy or pension plan comes to term. For example, a beneficiary to a life insurance plan collects the payout on the plan when the names subject of the plan passes away.
Comprehensive plans should name two levels of beneficiaries. The first person who stands to benefit from the plan is the primary beneficiary. This person has first claim on any benefits that may result from the maturity of the plan.
The second level of beneficiaries is known as secondary beneficiaries. Some forms may refer to these people as contingent beneficiaries. These people only see the benefit of the plan if a primary beneficiary is unable to collect, usually because they have died before the subject of the plan.
Plans allow a person to name any other party as a beneficiary to the assets. However, making smart choices as to this vital decision is extremely important to the future.
Many people believe that a will controls everything that is to happen upon their death. However, 760 ILCS 5/3(1) states that any person establishing a trust has the ability to name any beneficiary that they desire and that this right extends to the ability to apportion assets to those beneficiaries.
In short, benefit plans are separate contracts that take precedent over testamentary documents. For instance, if a life insurance policy names a friend as the primary beneficiary upon the policy holder’s death, and that friend is still alive at the time of the death, that friend stands to collect those death benefits.
It is easy to see why having an up to date and effective beneficiary structure on annuities, life insurance policies, and other estate plans is essential. An attorney could help to explain the interactions between these policies and estate laws, as well as to take the necessary steps to ensure that beneficiary designations meet a testator’s wishes moving forward.
A major part of estate planning is determining what is to be done with your sources of income upon death. Many people rely on annuities, pension plans, and life insurance payouts to support their families after their death. However, life circumstances do change, and what was in your best interest years ago may no longer apply. It is essential to review the list of beneficiaries on these policies to ensure that your money goes where you want it.
Additionally, the interactions between wills and these sources of income could create confusion if conflicts exist. For instance, an expressed desire to leave one’s entire estate to Party A could conflict with a pension plan that names Party B as a beneficiary. An attorney in Naperville could help to ensure that your beneficiary lists name the proper parties as recipients of your income after death.