Oswego Estate Planning Attorney: All About Designated Beneficiaries

 Posted on March 16, 2023 in Estate Planning

A person or entity is named the designated beneficiary to receive assets or property following a death. Designated beneficiaries can avoid the probate procedure and facilitate a seamless succession after death. As a result, asset transfers from one person or entity to another are handled smoothly and at the lowest possible cost throughout the transition phase.

A designated beneficiary is a person or organization specified to receive certain assets from financial accounts or legal documents. For financial accounts like life insurance policies, retirement accounts, bank accounts, and annuities, named beneficiaries are often anticipated. 

Many clients believe their Will or Trust will have complete control over their assets. Sadly, this may only be true if your beneficiary designations align with your Will or Trust. For example, in Illinois, "transfer-on-death" payees have been named beneficiaries on several brokerage accounts.

Although these agreements appear reasonable, if they conflict with your Will or Trust, they might have disastrous consequences after you pass away.

This article will help you understand everything you need about designated beneficiaries in Oswego and the neighboring areas of Kendal County, Illinois.

Why Designated Beneficiaries are Important in Oswego

Estate planning entails putting together a strategy to specify how your assets and healthcare will be handled in the event of a disability or how your estate will be managed after your death, whether through a trust you set up. At the same time, you're still alive or by probating a will, and how to minimize any applicable death taxes.

Wills, trust agreements, beneficiary designations for life insurance, 401(K) plans, IRAs, powers of attorney for healthcare and property, buy-sell agreements, and Living wills are examples of estate planning documents. Deeds to transfer real estate to a living trust and ownership transfers of financial assets to the trustee may also be included. Others may use a transfer-on-death designation for their bank or investment accounts and a transfer-on-death deed for their real estate holdings.

Because beneficiary designations enable you to transfer assets directly to others, independent of the provisions of your will, they are instrumental. In addition, beneficiary designations are frequently made when a financial account, retirement account, or life insurance policy is created. Therefore, a person should regularly review their designated beneficiaries.  

Your estate may also be chosen as the beneficiary. The asset (retirement account or life insurance benefit) becomes a part of your estate in this situation and will be dispersed in accordance with your will.

As a last option, you might identify assets "per stirpes" or "per capita." Per capita indicates that the assets will be distributed equally to your beneficiaries after your death. When assets are allocated to a specific person, stirpes suggests that if that person passes away before you do, those assets transfer to that person's heirs. Hence, if you give your son and daughter a 50/50 split of a gift if any of them passes away before you, their kids inherit the portion they would have gotten.

Things to Keep in Mind while Designating Beneficiaries in Oswego

Designated beneficiaries may have downsides if not done correctly. Nevertheless, designated beneficiaries may be crucial to a successful estate plan. The following are typical issues with planned beneficiary designations:

1. A lack of beneficiary designation updates:  It is typical for people to need to change specified beneficiary designations following significant life events like marriage, divorce, childbirth, or adoption.

2. Rigidity: Since a company's form may restrict inheritance possibilities or compel a person to select a designated beneficiary, even if it could be preferable for their circumstances, designated beneficiaries have a tight structure.

3. No Emergency Beneficiaries:  There might not be any dependent beneficiaries to transfer the account holder's estate to another person or business if the primary beneficiary predeceases them.

4. Restricted Command:  Lack of control and the inability to limit inheritances prevents the property's account holder or legal owner from shielding their beneficiaries from immaturity, divorce, or creditor worries.

5. The likelihood of disputes arising: To ascertain the valid owner of an investment, conflicts may emerge about the correct owner of an asset or account.

Peace of Mind Asset Protection, LLC specializes in Oswego and Kendall County estate planning and trust administration. In particular, the law firm's expertise emphasizes creating designated beneficiaries that pass smoothly from one person to the next. Therefore, incorporating your estate planning goals with updated designated beneficiaries is crucial.

Making Designated Beneficiaries Effective for an Estate Plan in Oswego

To cut expenses and prevent probate problems, combining targeted beneficiary designations with popular estate planning techniques such as creating pour-over wills, living trusts, or powers of attorney is wise. An effective estate planning option for transferring ownership of assets into a trust while the owner is still alive is a living trust. A trust is formed during one's lifetime by a "grantor" or "trustor," who may be an individual or legal body. A living trust is "revocable" because either the grantor or the Trust may alter the agreement while they live.

In contrast to beneficiary designations, a Living trust gives the grantor the freedom to automatically modify their estate plan in the event of a divorce, the birth of additional children or grandchildren, incapacity, or nursing home-related concerns. An individual or couple draughts a trust agreement that distributes their assets after death, just like a will. In contrast to a final will, a living trust is effective right now and provides for incapacity preparedness too.

In contrast to a will, a Living trust also bypasses probate court. Hence, a living trust is a solid and adaptable estate planning instrument to reduce estate expenditures and avoid probate court. A Living trust also offers efficient estate management since it has a plan for when a person becomes mentally incapacitated. A Living trust will also shield a beneficiary's inheritance from concerns about creditors, such as a spouse going through a divorce or a creditor.

A living trust is an effective estate planning strategy that gives people more control over how their fortune is distributed and shields their loved ones from immaturity brought on by old age, divorce, and creditor worries. In addition, because there is a seamless transition plan in place in the event of nursing home care or mental impairment, the Living Trust offers efficient estate administration.

Why is Estate Planning Necessary in Oswego

Asset diversification and asset protection are two legal specialties that combine to maximize protection from occurrences that deplete an individual's assets. Asset management is proactive preparation before litigation, taxes, and other life events negatively influence one's wealth and financial stability. Estate planning and asset protection are two practical wealth management strategies that work together to advance financial stability.

Let us take an example. John is the name of the kid Jack and Jill had. Jill adored John, but Jack thought he was reckless. Nevertheless, even if Jack survived, Jill intended to ensure that John received a sizeable inheritance from her. Thus, Jill established a Trust that would leave $300,000 to John even if Jack lived. Jill visited with her stockbroker after establishing the Trust, and together they constructed a "transfer-on-death" brokerage account designating Jack as the primary beneficiary.

The transfer-on-death beneficiary designation prevailed over the provisions of the Trust upon Jill's passing, and Jack received the funds. John received nothing following Jill's death because no additional assets could have passed to him through the Trust. What Jill ought to have done is designated her Trust as the primary beneficiary instead of her husband.

Comprehensive estate planning and asset management will lay a strong legal basis to safeguard against disability and death too. But, more significantly, developing a good asset management strategy will put in place safeguards to protect a person's and their family's assets from potential risks that endanger assets. As Oswego Estate Planning attorneys, we assess clients and their families to discover their problems, such as what keeps the client worried and what they are always concerned about.

Contact an Estate Planning Attorney in Oswego and Kendall County Now

For residents of Kendall County and the surrounding communities of Oswego, Plano, Oswego, Bristol, Newark, Leland, Sandwich, and Somonauk, Peace of Mind Asset Protection, LLC specializes in estate planning and trust administration. The firm specializes in trust administration and estate planning, with a focus on designated beneficiaries in particular as well. Our knowledgeable and experienced attorneys are always available to help you at any time with the best strategic plan for your estate, including guidance on how to include designated beneficiaries successfully.

Possessing assets in a secure location, such as real estate, business holdings, and other assets, can significantly reduce or even remove legal worries. A member of our team of attorneys well-versed in Oswego Estate Planning activities will help you arrange your initial consultation if you call us at 630-882-2467. You can also fill out our online contact form if you wish to be contacted by us instead.