Naming beneficiaries is an important part of end-of-life planning and making a will. By being prepared and specific, you can prevent confusion over where your money, property, and possessions go once you pass. Most will name their friends and family members as beneficiaries; however, if you choose, you can also give your money to a charity or causes you care about. Here are three common giving scenarios:
- Leaving your assets to a surviving spouse
- Dividing your assets evenly among your children
- Leaving your assets to parents, siblings, or extended family
If you wish to leave everything to just one person or split your assets evenly between two or more parties, you may not need to leave extensive instructions. However, if certain heirlooms like a painting or family treasure like your great grandmother’s recipe book should go to a certain friend or relative, you can (and should) specify that in your will.
Here are a few things that are commonly forgotten about when naming beneficiaries:
- Any business that you own, partially or totally
- Property that you may share, like a family cabin, farm, or even joint ownership of a boat or car
- A financial fund to pay for the food and veterinarian bills required by your pet
- Alternative beneficiaries in case your first choice is not available.
Leaving money and assets to minors
If you are naming a minor as a beneficiary, you can specify how and when they have access to money you leave for them. You can distribute in one chunk or over time unless it is for educational purposes; for example, half at 18 and the rest at 25.
You may also name someone to be a Financial Guardian to watch over assets granted to minors. This person can be someone other than the Executor of the Will or the Guardian of the child.
Stuff is just stuff, and in general, we could all get by just fine with less of it. However, some of our things are special or valuable, like your music collection, Elvis costume collection, or your favorite sweater. Items that may not be “worth” a lot can still mean a lot to others. Give some thought to these items and who would get the most joy or use from them. You can make things easier on your bereaved by considering these (seemingly) less significant items and naming beneficiaries for them.
Have you checked your beneficiaries lately?
Since you’re going through the effort to get your house in order, now is a great time to check your beneficiaries on your bank accounts, insurance policies, and investments. Who you last named on these accounts or policies (whether that be last week or ten years ago) is what will likely stand up in court — even if your will is more current. So update your beneficiaries (insurance, 401k, bank accounts) online or in person. Otherwise, your assets may go somewhere you no longer want them to.
Gift things you no longer need while you’re alive
Here’s a quick story from Alice in Minnesota about how her family gives away assets.
"My mother, as a little girl, watched her parents, grandparents, and cousins have nasty fights over pieces of furniture that were to be handed down. The fights were so bad that people did not speak to each other for years and she was determined that she would find a better way.
Whenever my two brothers, sister, and I visited home, Mom would pull out things she was ready to get rid of: old books, serving plates, vases, wall hangings, etc. She’d put four items together that she thought had equal value (monetary or sentimental). Then the four of us would draw a number (one through four). For the first group of items, the person who drew the "1" got to choose first, the person who drew the "2" choose second and so on. For the second group of items, the "2" person would go first, the "3" person would choose second and so on. We'd continue the rotation until all the items had been selected."