A beneficiary designation allows Ohio residents to determine who receives proceeds from a retirement or other financial account. It may also be used to transfer other assets in a timely manner after the current owner dies. However, there is also a chance that a beneficiary designation can create confusion or conflict between family members. This is partially because such a designation takes precedence over anything contained in a will.
Beneficiary designations generally trump what is written in a will because the will only governs assets in a probate estate. In most cases, assets that have beneficiary designations attached to them are held outside of the probate estate. Therefore, a probate judge has little to no power to stop the transfer of such assets from occurring. If beneficiary designations are not updated, a former spouse could receive an asset instead of a child or a charitable organization.
It is important to have contingencies in place in case an unexpected event occurs. For instance, there is a chance that a beneficiary may pass away before the person who currently owns an asset does. If there is no backup plan in place, there is a chance that assets could be split in a manner that doesn’t reflect a person’s wishes. This could lead to litigation or strained relationships between family members.
In many case, the estate planning process is one that will last for an individual’s entire adult life. An attorney may be able to help a person create an estate plan or review estate plan documents that are already in place. This may make it easier for people to remember to update beneficiary designations or take other steps to ensure that an estate plan meets their current and future needs.