Why It’s Important to Designate Them at Your Financial!
Understanding Beneficiaries: Why It’s Important to Designate Them at Your Financial Institution including North Star Credit Union
When it comes to future planning, many focus on creating a will to ensure their assets are distributed according to their wishes.
While a will is essential, selecting beneficiaries for your bank accounts is another crucial aspect of financial planning that often goes overlooked.
What is a beneficiary, and why is it important to designate one for your bank accounts?
A beneficiary is an individual or entity that is designated to receive the funds from your bank account(s) in the event of your death.
Unlike a will, which must go through the probate process, assets with designated beneficiaries can be transferred directly to the named beneficiaries, bypassing probate.
Selecting a beneficiary for your bank accounts is a basic process. When opening a new account, the credit union will ask for a beneficiary to be designated.
If you already have an account at the credit union and you want to add or change a beneficiary, please contact our staff to make the change.
What typically happens if I have both a will and a designated beneficiary for your bank accounts?
If you have a bank account with designated beneficiaries, such as payable-on-death or transfer-on-death accounts, will be paid directly to the named beneficiary without going through probate.
A will govern the distribution of assets that are not covered by beneficiary designations. This includes assets that are solely in your name and do not have a designated beneficiary. For example, if you have a savings account without a designated beneficiary, the funds in that account would be distributed according to your will.
If there is conflict, between your beneficiary designations and your will, the beneficiary designations will generally take precedence.
It is significant to note that selecting a beneficiary for your account does not replace the need for a will. A will is necessary to address other important matters, such as guardianship of minor children, distribution of personal property, and naming an executor to manage your estate.
It is important to connect with an estate planning attorney to ensure that your beneficiary designations and will are coordinated to achieve your planning goals.
In conclusion, designated beneficiaries on your bank accounts is a critical component of your overall estate plan.
* Information provided has been gathered from online sources including Trustandwill.com and is not considered or intended to be legal advice. Please contact an attorney for questions regarding beneficiaries and wills.