What Is a Designated Beneficiary?

Have you set up your retirement account with your employer or recently applied for life insurance? In either of these circumstances, you’ll need to choose someone to receive the assets inside these accounts/policies when you pass away. In general terms, this person is referred to as a beneficiary.

Completing aspects of your retirement plan requires you to name beneficiaries. A designated beneficiary is an individual who receives an asset like the proceeds of a life insurance policy or the balance in your individual retirement account after the death of the asset’s owner.

Per the Setting Every Community Up for Retirement Enhancement Act, the rules for designated beneficiaries have been narrowed and refined when it comes to the required withdrawals that must be taken from retirement accounts inherited from other people. A designated beneficiary is named on a policy or financial account as the recipient of the assets inside the account in the event that the account holder passes away.

A designated beneficiary must be a living person. A non-person entity cannot be a designated beneficiary even if the creator and owner of the account named a non-person entity. In order to receive the assets the designated beneficiary needs to contact the account manager to file a formal claim and provide a copy of the death certificate to receive their benefits.

Need more help with your Virginia Beach estate planning? Reach out to our office today to learn more.




What a Trustee Needs to Know About Making Final Distributions to Beneficiaries

Although beneficiaries of a trust will naturally have questions earlier on in the process, the concept of when they’ll receive their check or the assets set aside for them usually needs to be answered later on. Making distributions of remaining trust assets comes at the end of the process when a trustee is settling a revocable living trust.

This is because the successor trustee has to ensure that every single expense and fee associated with administering the trust or the related probate estate have been settled and that all taxes have been paid or money has been set aside to pay those final taxes and bills. If the trustee chooses to make distributions to the beneficiaries and expenses come up down the line, that person will then have to pay those expenses out of their own pocket.

If it is anticipated that the administration of the decedent’s trust will take longer than 12 months, the successor trustee might need to reach out for additional resources, such as hiring a trust attorney and an accountant.

This can ensure that enough assets are appropriately set aside to pay ongoing expenses of the trust and then allow for those final important distributions to be made to the beneficiaries of that document. Schedule a consultation today with a trust planning lawyer in Virginia Beach to learn more.

What Is Disinheriting a Beneficiary?

You’ve probably heard plenty of advice that you need to distribute your assets in your estate in a streamlined manner using estate planning documents. This is a basic tenet of the concept of estate planning and can be very beneficial for ensuring that your loved ones have an easier time receiving your assets in the future. However, you might have questions about when not to include someone in your estate.

Many people are surprised to learn that disinheriting a beneficiary or excluding them from receiving assets inside your estate is more common than you anticipate. It may be as a result of a beneficiary’s lifestyle choices, such as concerns over them being a spendthrift or a current addiction.

Furthermore, you might have a family member who is disabled and cannot receive assets directly without compromising their government benefits. When it comes to disinheriting, it is a best practice to explain either in a separate letter or in your core estate planning documents the reasons behind your decision. This can help to minimize the possibility of conflict or confusion in the future.

Hard feelings among family members can turn into legal conflicts and arguments that your estate is invalid. This can decrease the overall value of your estate and lead to in fighting among family members.

It is always best avoided where possible. For more information about the process of establishing estate planning documents that transfer assets to some and disinherit other beneficiaries, you’ll want the support of a Virginia Beach, VA estate planning lawyer.  


What Is a Payable on Death Account?

You might discover in the process of administering someone else’s estate or in structuring your own estate the existence of a payable on death account. A POD account is an arrangement between a credit union or bank and a client that designates the beneficiaries who will receive all of the assets belonging to that client.

This immediate asset transfer is triggered when the client passes away. Any person with a certificate of deposit at a bank can determine a beneficiary who is eligible to inherit any money in the account after his or her death. A named beneficiary on such a bank account will be referred to as the payable on death account.

One of the primary reasons that people opt for payable on death accounts in Virginia is to keep this money inside a bank account outside of probate court in the event that the owner of the account suddenly passes away.

Designating a beneficiary is an easy and free service that allows for the transfer of savings bond, savings accounts, checking accounts, security deposits and other deposit certificates. In order to do this, you must visit your credit union or bank to discuss it.

Your primary responsibility here is to notify the bank of who the beneficiary should be. A completed form filed with the bank will give that financial institution the right authorization to convert the account to a payable on death.

The beneficiary named in a POD account is not eligible to receive any of the money in the account while the account holder is still alive. However, when the owner of the account passes away, the beneficiary becomes the automatic owner of the account allowing this to bypass the traditional estate process. Want to create other tools for estate planning? Schedule time to speak with a VA Beach estate planning attorney.



Do I Really Need Life Insurance Beneficiaries?

So you already have a life insurance policy in place as part of your estate plan- smart move. As part of your application and final policy approval process the company probably gave you a beneficiary form.

This form is extremely important and should not be ignored. Even if you write in your will that your life insurance policy will be given to a certain family member, you should know that the forms filed with the insurance company for your beneficiaries take precedence when your estate is administered.

This is also because your estate passes outside of the traditional probate process. These forms are key for telling the insurance company who gets all or part of your policy proceeds, so they should be filled out and then reviewed each year as well.

If you’re new to life insurance as part of your overall estate plan, you are not limited to just one beneficiary. You can list both a primary and contingent beneficiary so that there’s a backup, and you can split the proceeds of the policy between different parties so long as you allocate these percentages properly on the beneficiary forms.

Most people use life insurance policies to help when there is a need for general living expenses or for a big expense like paying off a mortgage or for a child’s college tuition. Since a will can get tied up in probate for a long period of time, the life insurance policy can help your family get back on their feet sooner rather than later.

In conjunction with a will, a trust, and other estate planning tools, you’re empowered to cover a lot of bases with your Virginia estate plan. If you have questions about the process or need help creating these documents, a Virginia estate planning lawyer can help you create a comprehensive and unique strategy.

What You Need to Know About Using Minors as Primary Beneficiaries

Estate planning issues that have to do with children can be extremely complex. Minor children are usually only able to own a small amount of property directly in their own names.

This is why many parents choose to use tools, such as a trust, to pass on property to their children through the management of a trustee. The amount that minor children can accept outright in their own name varies from one state to another, so it’s important to discuss with your individual estate planning attorney what to expect.

Any property that belongs to a minor beyond that amount has to be legally supervised and controlled by an adult. If you are considering leaving behind a substantial gift to a minor, you should select an adult to be responsible for it.

You have two major options when preparing to pass on property beyond the allowable amount. These include:

• Leaving the gift to the child and naming an adult able to be responsible for supervising it. The adult can be one of the parents of the child but does not have to be directly.
• Leave the gift to the other parent who is eligible to use it for the child’s benefit. If the parents can cooperate and get along with another and can trust that any money will be managed well, this is usually the simplest way to address the matter.

For more helpful comprehensive estate planning issues having to do with children, schedule a consultation with a lawyer today.