The Worst Choices Of Beneficiaries Of Non-Probate Assets

Non-probate assets are the key to saving money on transferring your property to your heirs after you die.  Any property that you own solely, and which you have not preserved in the form of a non-probate asset, will become part of your estate and go through probate.  This means that the beneficiaries of your will cannot inherit it until your estate settles.  You can save everyone a lot of stress with non-probate assets such as trusts, life insurance policies, and transfer on death (TOD) bank accounts.  The existence of these non-probate assets put you and your heirs in a strong position, but you should choose the beneficiaries of your non-probate assets wisely.  Ultimately, the choice of beneficiaries is up to you, but there are certain categories of beneficiaries you should avoid.  For advice on choosing beneficiaries for your non-probate assets, contact an Orlando estate planning lawyer.

Your Estate

Listing your estate as the beneficiary of a life insurance policy or other non-probate assets is as bad as not listing a beneficiary.  If you do not list a beneficiary, the money will go to your estate anyway, which means that it will be a matter of public record during your probate case.  This means that creditors can claim your insurance money, both the creditors you knew you owed and the ones that came out of the woodwork when the personal representative publishes the legally required notices to creditors.  One of your relatives might challenge the will, and whether the challenge succeeds or fails, the litigation will cost time and money, and your heirs will be disgruntled.

Minor Children

Minors cannot own property in their own right.  This means that, if you name them as beneficiaries of your life insurance policy and you die before they reach adulthood, a court-appointed trustee will be in charge of the money until the beneficiaries reach the age of maturity.  A more straightforward solution is to establish a trust with the minors as beneficiaries.  This still means that an adult controls the purse strings until the beneficiaries grow up, but at least it is an adult of your choice.

Former Spouses and Estranged Relatives

Designating a beneficiary for a non-probate asset is only the beginning.  You should review your choices every year to see whether you want to update your choice of beneficiary.  If you don’t do this, the asset could bypass probate and go straight into the bank account of an ex-spouse that you divorced long ago or an estranged relative that you have not spoken to in years.

Relatives Whose Health Is Fragile

When an infirm relative inherits property, it turns into a feeding frenzy of undue influence.  If one of your relatives is in declining health, he or she should issue a power of attorney sooner rather than later, or you should make plans for court-appointed guardianship now instead of when things get worse.

Contact Gierach and Gierach About Non-Probate Assets

An estate planning lawyer can help you ensure that your non-probate assets serve their intended purpose.  Contact Gierach and Gierach, P.A. in Orlando, Florida to discuss your case.

Source:

wealthyaccountant.com/2024/12/09/never-name-as-beneficiary/