6 Possible Complications in Naming a Beneficiary

Naming a beneficiary is an important part of the estate planning process. You will be required to name a beneficiary for many functions, such as your life insurance policy and your retirement accounts. When naming beneficiaries, here are some possible publications that you could run into.

1. Subsequent Marriages

One of the biggest problems that people run into when naming beneficiaries is that they have subsequent marriages. When you have children from a previous marriage, it can be difficult to make sure that they are taken care of. If you do not take the proper estate planning steps, much of your estate is going to go to your new spouse if you die. Your children from previous marriages may not be able to receive anything.

2. Unmarried Couples

Unmarried couples have more problems when it comes to naming beneficiaries. Married couples have certain provisions and rights that will make sure that property gets to the other spouse when one of them dies. However, if you are an unmarried couple, you are going to have to make sure that you make the proper provisions to leave your possessions to them. You are going to have to write a will that names your unmarried spouse as the beneficiary for them to get any of your assets.

3. Unequal Distribution of Property

Another potential problem that you could run into is when you want to distribute your assets unequally among your beneficiaries. In most cases, if you name two beneficiaries for a retirement account or a life insurance policy, the money is going to be distributed equally to them. If you want to distribute more of your assets to one beneficiary over the other, you are going to have to make special provisions in your estate planning documents to do so.

4. Shared Gifts

Another problem that sometimes comes along when you are talking about distribute in assets is when you specify a shared gift for more than one person. For example, you might own a piece of property that you want multiple people in your family to be able to have access to after you die. This can sometimes be a problem because one of the beneficiaries want to claim ownership of that gift instead of allowing multiple beneficiaries to use it.

5. Irresponsible Beneficiaries

Another common problem is when you have irresponsible beneficiaries. You might be afraid to leave a certain sum of money to one of your children because you fear that they would waste the money on frivolous purchases. In this case, you might have to set up some type of a trust so that you can determine when, and how, your beneficiaries will receive their money after you are gone.

6. Pets As Beneficiaries

Many people are also trying to name their pets as beneficiaries. If you want to do this, you will need to establish a pet trust so that your pet will have the resources that it needs when you are gone.

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