New York residents can sometimes use beneficiary designation forms in order to have certain types of property transfer at their death. While many individuals may plan for this possibility, they may fail to consider a plan B.
A careful assessment of an estate plan requires looking into how non-probate assets will transfer upon the testator’s death. Certain accounts do not pass through a will, even if there are provisions to the contrary. These assets include brokerage accounts, insurance policies, retirement accounts and bank accounts. However, if an asset of this nature does not have a beneficiary designation or the beneficiary designation is no longer valid because the beneficiary died, the asset will revert to the ownership of the estate.
Beneficiary designation forms usually contain an area for the primary beneficiary. They will in most cases also allow for a contingent beneficiary as well. This is a person who is next in line to acquire the account if the primary beneficiary predeceases the account holder. For example, a person may list a spouse on a bank account and list adult children as contingent beneficiaries. If the spouse is still alive, he or she will inherit the account. However, if the spouse predeceases the account owner, the children would receive the account assets instead. It is good practice to work with an attorney to periodically review the beneficiary designations and update them if circumstances do dictate, such as marriage, divorce or a birth of a child.
Another effect of owning assets that are distributed in accordance with beneficiary designations is that they do not go through the probate process , which can often be lengthy. This can often make the estate administration tasks easier.