When you open an investment account or a life insurance policy, you need to choose a beneficiary to benefit from your assets. The company operating the account will require you to fill out a beneficiary designation form with the names of the individuals or group that would inherit your money. For a lot of families, choosing who would inherit investments or policies can be a challenging endeavor. Here are some common considerations to help you move through the process.
What Are Your Options?
As a policy signer, you have four different options regarding beneficiaries:
What Is Best for You?
When you consider how to manage your beneficiaries, think of who would most benefit from the assets and who could handle them responsibly. If you have an elderly relative or young children, you may want to consider opening a trust on their behalf. With some policies, you can also choose to distribute income over time, with long-term payments rather than a lump sum.
There are a few legal realities to take into consideration, too. In most states, spouses receive tax-advantages when added as a beneficiary. This means that your spouse would pay less taxes on the funds from your policy than anyone else you could name. If you are married but choose not to designate your spouse as a beneficiary, you also may need to fill out additional forms. If you ever feel differently about a named beneficiary, you can make an easy change --- this is especially important after any life changes, like divorces or deaths of family members.
If you need help discerning the best individual or group to name on your beneficiary designation form, reach out to a certified financial counselor to help guide you forward.
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