Beneficiary Designations: Your Final Word

Are you sure your assets will be distributed the way you want them to be after your death? Educate yourself on the types of beneficiary designations so you can make the right decisions for your assets!

We all understand the importance of having a will. And while that document is indeed your “last will and testament,” it is not necessarily your final word when it comes to some of the assets that make up your estate.

Let’s take a look at beneficiary designations, so you do have the final word on where your assets go after your death.

Beneficiary Designations:

  1. Primary Beneficiary
  2. Contingent or Secondary Beneficiary
  3. Per Stirpes
  4. Per Capita
  5. Updates are Critical

Beneficiary Designations

Beneficiary designations allow you to transfer assets like financial and retirement accounts and life insurance policy proceeds directly to a person regardless of the terms written in your will. Beneficiary designations are typically activated immediately upon your death and override information concerning inherited assets written into your will. This means those assets do not have to go through the probate process, a legal proceeding that can be expensive and lengthy.

Primary Beneficiary

Your primary beneficiary or beneficiaries are first in line to inherit. If you choose more than one primary beneficiary, you will need to decide what percentage of your assets each one will receive.

Primary beneficiaries can be spouses, partners, children, other relatives, friends, trust, charity, or institutions.

“Can I name more than on beneficiary on my account?”

Contingent or Secondary Beneficiary

If your primary beneficiary were to die before you or with you, your assets would pass to a contingent or secondary beneficiary. These beneficiaries can be anyone or anything listed above.

Per Stirpes

Per stirpes is Latin for “by branch.” It refers to what will happen to your assets if one of your beneficiaries dies. That person’s children would then receive their parent’s share of the assets you left to them initially.

If you left 50% of your life insurance proceeds to your spouse and 50% to your son who predeceased you, that 50% would then go to his children, split equally between them.

Per Capita

Per capita is Latin for “be the heads.” It means that if a beneficiary dies before you, any assets left to that person don’t go to his or her children but are distributed to the “similar” remaining beneficiaries. In the above example, 50% of your life insurance proceeds would not go to your son’s children, but the entire balance would go to your spouse.

Per capita is something to consider if, for whatever reason, you do not want grandchildren receiving a particular or any asset.

“Are your beneficiaries updated on your accounts?”

Updates are Critical

We all know how important it is to update our will when we have a significant life event like a marriage, a divorce, a child, another child, or a death. But we might not think about updating beneficiaries for specific assets.

Make sure that your current beneficiary designations reflect your current wishes because your will does not supersede them.

With the 1 Page Wealth Plan we make sure you update your beneficiaries.

If you would like to work with me Click Here.