When you create your estate plan, you’re taking the time to make sure that your assets are given to the right people. By naming beneficiaries, you’re in control over how your assets will be distributed after your death. Unfortunately, your assets may not be able to be given to your first choice beneficiaries. Take a look at some of the information below to better understand the importance of naming alternate beneficiaries. If you have any questions, or if you need help creating your estate plan, contact an estate planning attorney.
There is a chance that one or more of your beneficiaries dies before you. If this is the case, you may not get around to making updates to your plan. Alternately, you may later become legally incapacitated, e.g., dementia, and, therefore, be unable to update your estate plan even though you have survived your primary beneficiary. It’s best to name primary and alternate beneficiaries so that your wishes are carried out.
How exactly does this work? If you would like to give your car to your brother after your death, you would name him as the primary beneficiary. If you’ve decided to name your cousin, Fred, as an alternate beneficiary, you will also include this in your plan. If your brother is not surviving after your death, your car will be given to Fred.
If you don’t take the time to list alternate beneficiaries, your wishes may not be known or respected. Because your primary beneficiary isn’t able to receive your assets, your state’s law may decide how the asset is distributed. This means that you will have no say in how your asset is distributed.
It’s important to carefully consider possible alternate beneficiaries when creating your estate plan. You should choose individuals who you trust and appreciate. Take the time to think through the best alternate beneficiaries so that your assets are in good hands.
If you have any questions about choosing alternate beneficiaries, or if you’d like to review and update your estate plan, consult with an experienced and qualified estate planning attorney.