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How should you choose beneficiaries?

On Behalf of | Jun 10, 2024 | Estate Planning

A beneficiary is someone who receives assets from a will, trust, insurance policy or retirement account.

When creating an estate plan, people need to know the different options that they have for choosing beneficiaries. It is important to make thoughtful choices during this emotional time, even if it requires extra planning.

Thinking about relationships

When deciding on beneficiaries, people should consider close relationships first. It may seem obvious to pick family members, but close friends or other relatives are also great options.

A person needs to evaluate the reliability of each individual. They can even consider how big a role an individual plays in their life. This person must also stay aware that they could choose charities or organizations to give money to and pick more than one beneficiary.

Considering financial needs

People should look at the financial situation of potential beneficiaries when making an estate plan. Some individuals may need more financial support than others.

For example, a child with special needs or a relative facing financial hardship might benefit more from an inheritance. It is important to balance fairness with the specific needs of each beneficiary.

Using clear communication

The individual writing the estate plan needs to communicate their decisions to any beneficiaries clearly before making the final choice. They should explain their choices and the reasons behind them. This way, a person can refuse if they feel uncomfortable being a beneficiary for some reason.

No one should feel ashamed of taking time to think about this choice. Following these steps helps provide security for loved ones and ensures a person preserves their legacy in the form of an estate plan long after their death.