How Do Beneficiary Designations Coordinate With Your Will or Trust?

Beneficiary designations can be a great way to make sure that certain assets go straight to a loved one or charitable organization without the need to go through probate. However, your designations need to be carefully coordinated with your will and any trusts you set up, and a Columbia, MD estate planning attorney can help you make sure this is done correctly.

How Beneficiary Designations Coordinate With Your Will or Trust

To properly understand how this works, you need to grasp:

• What a beneficiary designation is
• Why you would set one up
• How designations coordinate with a will
• Rules for choosing beneficiaries

What Is a Beneficiary Designation?

There are certain assets where you can designate a beneficiary who will immediately receive that asset upon your death. The most common of these is a life insurance policy. Whoever is the designated beneficiary of your life insurance receives the payment , and that money does not go into your estate and is not figured as part of your will. This means it does not go through probate.

Why Would You Set One Up?

You might wonder why you would set these up if your will already designates family members as beneficiaries to your estate. You certainly can choose to designate your own estate as the beneficiary of your account accounts, but one of the key reasons to set individual designated beneficiaries is to allow your family to avoid the probate process, which in Maryland can be very long and expensive.

How Do Designations Coordinate With a Will?

This is where things can get tricky and why it’s important to have an estate planning lawyer help you set everything up. Generally speaking, your designated beneficiaries will take precedence over the terms of your will. You want to make sure that there are no instructions in your will that conflict with your designations so that there’s no confusion in the probate process or personal conflict among your family members.

Even worse, that interference could actually prevent your will from being executed according to your wishes. This is why some designations go directly to the estate.

Who Can Be a Designated Beneficiary?

It depends on the type of account. For life insurance, nearly anyone over 18 can be designated, and if you wish to designate a minor, the money would go to their guardian or into a trust until they turn 18.
You can also designate charities, churches, or other entities, like your business.

With retirement accounts, things are trickier. Under the SECURE Act, only surviving spouses, minor children, disabled or chronically ill individuals, and those who are less than 10 years younger than you can be designated.

Get Help from a Columbia, MD Estate Planning Attorney

The best way to be sure your designations and your will are coordinated is to work with an experienced attorney from the start. Set up a consultation with us at Elville and Associates at our offices in Columbia, Rockville, or Annapolis today, and we’ll guide you through the process.

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