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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outdated.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 a 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.
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