When you are looking at creating an estate plan, there are a lot of key terms you will need to fully understand. Beneficiaries are one of the most important people named in your will or trust. A beneficiary is the individual or individuals who will benefit from your will or trust. Put plainly, they are the ones who will take ownership of your assets once you pass away. Lucé Evans Law is happy to explain to you the estate process and what being a beneficiary means. Here are a few important things you need to know about beneficiaries.
You Name the Beneficiaries
Beneficiaries are specifically named within the trust or will and only the assets you specify should go to them. This is different than passing away without a will or a trust. When you die without any sort of estate documents, your assets will be distributed based on intestate rules that vary from state to state. Typically, the assets are distributed starting with your spouse and immediate family members, and then any leftover assets are spread amongst extended family. If you have no descendants, then your assets would become property of the state.
Why Is Naming Beneficiaries Important?
It is important that you specifically name beneficiaries when you want to make a specific gift. It can also be helpful when there are specific family members you would not like to name in your will or trust who would inherit based on an intestate distribution. By naming specific beneficiaries, you can ensure that your assets are divided according to your wishes after you pass away.