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Does Beneficiary Designation Overrule a Will?

Does Beneficiary Designation Overrule a Will?

Ashley Kilroy   Mon, May 22, 2023

Some financial products like life insurance or tax-advantaged retirement accounts require you to name one or more beneficiaries. However, that’s not the case with many assets. For instance, you can buy a house or set up a savings account without designating who should receive it when you pass away.

While beneficiary designations for specific financial products are necessary, they are not sufficient by themselves for creating a comprehensive estate plan. A financial advisor can help ensure that you have a holistic estate plan.

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What Is a Beneficiary Designation?

A beneficiary designation assigns a person or party to receive benefits from a financial product, such as a retirement account or life insurance policy. For instance, say you have life insurance with a $500,000 payout. If you pass away, your insurance company fulfills the policy by distributing money to your designated beneficiary (the person, people, or entity you define in your policy).

 You might list your spouse, children or siblings as beneficiaries. You can also choose a charity or nonprofit organization to receive money from your policy.

Some financial products allow you to assign two types of beneficiary designations: primary and contingent. As the name suggests, your primary beneficiary has priority in your list of beneficiaries.

In other words, if you pass away, the insurance company or financial institution will attempt to send payment to your primary beneficiary first. If your primary beneficiary doesn’t respond to the communication or is no longer alive, the company will try to distribute payment to your contingent beneficiaries.

If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now.

What Is a Will?

To continue reading, please go to the original article here:

https://finance.yahoo.com/news/beneficiary-designations-vs-wills-care-140023243.html

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