A substantial portion of one’s estate is controlled by beneficiary designations. Life insurance, retirement plans, IRA’s, TSP’s, 401(k)’s, 403(b)’s, payable (or transfer) on death accounts, annuities, and certain other assets are distributed to named beneficiaries when the owner dies. The owner’s Will does not affect the distribution of these assets.
Many people need to update or correct designations. Life events, such as marriage, divorce or death may cause a beneficiary designation to be outdated.
It is also recommended that minor or young adult children not be named as primary or secondary beneficiaries. Most of them do not have sufficient life experience or maturity to manage large sums of money. Naming a trust for their benefit as the beneficiary is an alternative.
Also, naming as beneficiary someone receiving governmental assistance may disqualify them from further assistance. Again, naming a trust may be a better solution.