Whether you already have your wishes for estate planning, wills, trusts, and life insurance in order, you need to make sure that you name a beneficiary. If you don't, the funds and assets that you set aside for your loved ones could end up in the wrong hands.
This can be especially challenging due the changes the family unit has seen in recent decades. Adoption, divorce, and "non-traditional" family structures are not that uncommon anymore, and you need to make sure that you provide help to your loved ones by naming a beneficiary before you pass.
If you pass without having named a beneficiary, your assets could be subject to your state's intestate succession laws. Here are just a few types of assets that could be subject to state laws in Colorado that could violate your last wishes:
- Life insurance payments
- Retirement account fund such as IRA's, 401(k)'s, and various other retirement accounts
- Paper assets and securities that are held within an account that transfers on death
- Bank accounts that are payable on death
- Real estate subject to transfer on death
These are just a few types of assets that could transfer to unintended parties, but there are many, many more. For each investment and asset that you own, you need to make sure you have your ducks in a row by naming a beneficiary – or your family could suffer in your absence.
Again, because today's families are far from the "traditional" family units of the 1950's, naming a beneficiary is much more important than it was in decades past. If your family has experienced a divorce or an adoption by a step-father or step-mother your loved ones could suffer serious consequences regarding how your estate and assets are divided after you pass.
The words used to express laws and legal matters often times contain grey areas. For example, sometimes it is written that a beneficiary is to be given ownership of assets if there is "any surviving child (if no surviving spouse exists)." The problem with this statement is that it can be ambiguous – especially if you have both biological and adopted children.
You need to consider, however, that the consequence isn't only the risk that your assets will be transferred to unintended parties. With the ambiguity and the misunderstanding of your intentions comes inter-familial tension. Your remaining loved ones could fight amongst each other in lengthy (and expensive) court battles because each party believes they were rightfully entitled to your assets.
Leaving your assets to your loved ones who need them most is difficult at best without naming a beneficiary. But do you really want to potentially cause a fight between your family members? Instead of leaving it to chance, you are much better off securing the futures of your loved ones by taking the due diligence to name a beneficiary. To ensure that your assets, remaining retirement funds, and your estate are transferred to their intended parties, you should seek the help of qualified legal counsel so you can live with the peace of mind that your family will be safe after you have passed.