Writing a will or trust is one method of leaving money to specific people. Making beneficiary designations in Pennsylvania is an alternative method of setting aside funds in a life insurance policy or retirement account. Opening most types of financial accounts gives people the option to designate beneficiaries.
What it is
Beneficiary designations indicate who receives your inheritance after your death. A will does not fully guarantee that the listed beneficiaries will receive your property and assets.
Who benefits
Anyone who owns a life insurance policy, retirement account or financial account is able to select beneficiary designations. A financial company allows you to list the beneficiaries in an agreement that could override your will. This option is available to owners of pay-on-death (POD) or transfer-on-death (TOD) accounts, securities, bonds and other financial assets.
There are different types of beneficiaries available for estate planning. An irrevocable beneficiary has full rights to your death benefit while a revocable beneficiary has no guaranteed rights and can be removed from a plan at any time. A contingent beneficiary receives the benefits if a certain condition is met in a will or trust.
How it relates to a will or trust
A beneficiary designation provides benefits after the estate owner is deceased. The beneficiaries are not provided for if the owner becomes incapacitated. This option is only part of an individual’s estate plan that does not include a will, trust or power of attorney.
Beneficiary designations indicate who receives your assets after your death. Many owners of financial accounts overlook the benefits of this option. Beneficiary designations are commonly used with life insurance policies, retirement accounts and death benefits.