A directive on financial accounts specifying who receives the assets upon death.
Beneficiary designations are instructions attached to financial accounts — life insurance policies, retirement accounts (IRAs, 401(k)s), annuities, and transfer-on-death accounts — that determine who receives the assets when the owner dies.
Critically, beneficiary designations override your will. If your will says everything goes to your children but your life insurance names your ex-spouse, the ex-spouse gets the proceeds.
This is one of the most common — and costly — mistakes in estate planning. Designations must be reviewed and updated after major life events: marriage, divorce, births, deaths.
Coordinating beneficiary designations with your overall estate plan is essential. They should work in concert with your trust structure, tax strategy, and distribution intentions.
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