(856) 439-6223Your estate planning process involves many decisions and documents, which can sometimes feel overwhelming. A seasoned estate planning attorney could help you organize your thoughts and intentions and prepare the necessary documents.
More importantly, working with a lawyer could help ensure that the people or organizations you want to receive your property can do so without involving the court. Designating the beneficiary for certain assets and properties may be necessary, and a lawyer could help with the beneficiary designations in New Jersey estate planning.
Properties Requiring Designations
Understanding beneficiary designations is an important step in the estate planning process because some assets cannot be distributed in the will. Assets, including bank accounts, brokerage accounts, retirement accounts, and life insurance, must be designated to a beneficiary and distributed through a trust.
These assets could protect the owner’s family for the rest of their lives, so discussing beneficiary designations with an attorney during estate planning in New Jersey could ensure the assets are properly passed on.
Types of Beneficiaries
The person or entity who will directly receive an asset upon an owner’s death is a beneficiary. This is not the same as an heir because a beneficiary is chosen, while an heir can receive the property by default if the owner passes away without making a will. The original owner of a retirement or bank account must choose who will receive these assets in the event of their death.
There are four common categories of beneficiaries with different eligibility rules and rights:
- Eligible designated beneficiaries
- Designated beneficiaries
- Not-designated beneficiaries
- Contingent beneficiaries
The category of eligible designated beneficiaries has five categories within itself: the account owner’s surviving spouse, the owner’s minor children, a disabled individual, a chronically ill individual, and any other individual who is 10 years or more younger than the owner. Designated beneficiaries are any other eligible living person, such as a friend or elder parent. The main difference is that eligible designated beneficiaries can take a lump-sum withdrawal from the account or use their life expectancy to receive distributions. In contrast, designated beneficiaries must clean out the account within 10 years.
A not-designated beneficiary is a non-living beneficiary such as a charity or a trust, and a contingent beneficiary is a living person or non-living entity that receives the asset if the original beneficiary cannot.
Decisions to Consider
Consulting with an attorney could be valuable because there are several factors to consider when planning an estate and making beneficiary designations in New Jersey. For example, life insurance benefits could be revocable or irrevocable for beneficiaries. A revocable beneficiary can be changed anytime, while an irrevocable beneficiary cannot. This can be useful to ensure that the benefit goes to the intended beneficiary.
It is also possible to set fixed amounts or percentages that the beneficiaries will receive, and a lawyer could help with the decision-making process.
Ask a New Jersey Attorney About Making Beneficiary Designations During Estate Planning
A dedicated attorney could help you make your beneficiary designations in New Jersey estate planning. This is an important step, and there are several things to consider before making a decision.
An attorney could help guide you through the process and consider all possibilities. Contact an attorney at Nesevich Law to get started.