Estate Lawyers Navigating Beneficiary Designation Challenges in Ocean County, NJ

Our Skilled Attorneys Can Help You Manage the Difficulties in Naming a Beneficiary for your Estate Plan in Howell, Wall, Barnegat, and Surrounding Communities.

The people or entities who receive payments or assets from your accounts and property after your death are called beneficiaries. They are assigned when you draft your will. You can designate specific assets such as life insurance policies, real estate, and retirement accounts to one beneficiary, to be divided between several beneficiaries. This will avoid the probate process and allow your estate to be settled more efficiently. Your beneficiaries don’t have to be actual people. You can designate assets to charities, trusts, or non-profit organizations.

There are some disadvantages linked to specifying beneficiaries for non-probate assets. However, the effect can differ for each person in each particular case. It is highly advisable to seek guidance from an experienced estate planning lawyer at Bronzino Law Firm before making any decisions in Stafford, Lacey, Ocean Township, Point Pleasant, Brick, Sea Girt, and Freehold, and throughout Ocean and Monmouth County. Feel free to contact our staff at (732) 812-3102 or by completing the online contact form on our website.

SECURE Act Designated Beneficiaries Categories and Roles in NJ

According to the SECURE Act of 2019 (Setting Every Community Up For Retirement Enhancement), several types of designated beneficiaries exist. An Eligible Designated Beneficiary (EDB) receives funds from an IRA or retirement account. An EDB cannot be an entity. It must be an actual person. There are five categories of possible EDBs:  the surviving spouse, a minor child less than 18 years old, someone who is chronically ill or disabled, and anyone who is 10 years younger or less than the deceased. An EDB can request the entire account balance in one payment or installments for up to ten years after the owner’s passing.

Designated Beneficiaries (DB) are any persons who are beneficiaries but do not fall under the EDB categories. They are entitled to inherit retirement accounts, life insurance policies, annuities, or the balance of other funds. Charities or non-profits cannot be designated beneficiaries. A designated beneficiary can be revocable, which means the owner of the assets can alter their estate plan, or irrevocable, which doesn’t allow the beneficiaries to be changed.

A person cannot be a Non-Designated Beneficiary (NDB), as it is reserved for charities, trusts, or estates.

The Primary Beneficiary (PB) is the first in line to receive benefits from a will, life insurance policy, and other assets from the deceased. It can be an individual or an entity, such as a non-profit organization or a charity.

The Contingent Beneficiary (Secondary) receives the proceeds from the deceased’s estate when the primary beneficiaries are no longer living, cannot be located, or do not qualify.

Perils of Neglecting Beneficiary Updates

If you don’t keep your beneficiaries up to date, your assets may go to someone you hadn’t intended. A common example is in the case of a divorce. If your ex is your beneficiary, they will receive a portion (or all, depending upon the stipulations in the will) of your assets, while your present spouse will not receive anything.

Unique Aspects of New Jersey’s Beneficiary Designation Laws

There are a few differences between New Jersey’s beneficiary designation laws and those of other states. In New Jersey, immigration status doesn’t matter in terms of inheritance. Also, half-siblings are treated as though they were regular siblings. Lastly, if an heir receives property during the deceased’s lifetime and the gift is noted in writing, its value can be deducted from the receiver’s share.

Essential Factors to Consider in Designating Beneficiaries

There are a substantial number of pitfalls that could alter the manner in which you want your assets distributed. The most common is not changing your first spouse as a beneficiary after you remarry. Estate law does not differentiate between your former spouse and your actual one if the beneficiary isn’t changed. If you don’t remarry, you can review how you would like your assets to be doled out.

You should never refer to your heirs as simply “my children.”  Each beneficiary should be listed by name. For example, Mr. White had five children with his first wife. His second wife also had five children. He adopted the youngest three, who took his last name. The older two didn’t want to be adopted. When he listed his beneficiaries as “his children,” the two who were not adopted were excluded from the inheritance.

Sometimes, mistakes are made when the financial impact an inheritance could have is not considered. Perhaps a beneficiary has a substance abuse problem or a gambling addiction. Maybe they are not prudent about their spending. It is better to create a trust with restrictions on how much they will receive over time and how the funds are used.

Some wish to control the actions of their heirs even beyond the grave. When stipulations are placed on heirs, such as demanding they have a child, divorce their present spouse, or the heir will not receive their share, those demands are ignored. One cannot obligate these kinds of actions for disbursement of the estate. Perhaps you are not comfortable telling everyone in your family who is going to get what and how much, but letting them know ahead of time allows them to process the news rather than fighting your wishes in court after your death.

Naming a minor as a beneficiary is a problem when they remain a minor after your passing. The funds wouldn’t be distributed until the court makes a decision or the minor turns 18. If a beneficiary relies on a supplemental income from the government, they could stop receiving benefits depending upon the amount bequeathed. You can create a supplemental needs trust to provide the heir with funds without forcing them to renounce their benefits.

When you don’t name any beneficiaries for retirement accounts or life insurance, the financial companies you belong to have their own rules about what happens to your assets. Your family will probably have to hire an attorney and go to probate court to get the proceeds. Although it may seem inconsequential, misspelling the names of the beneficiaries can cause problems. Not having the names match can cause delays and, sometimes, litigation.

An Estate Attorney Can Bring Legal Clarity to Your Beneficiary Designation Process in NJ

An estate attorney provides you with invaluable information and resources to make the disbursement of your assets clear and legal. Their understanding of state and federal laws, including tax laws, can make a difference as you create your estate plan. They can assist you in creating a will, choosing your beneficiaries, naming a power of attorney, and providing tax advisement that will benefit you, your estate, and your beneficiaries.

Talk to a Brick, NJ, Estate Plan Lawyer Today

Creating a plan for the future is something you want to do the right way. Our attorneys at The Bronzino Law Firm, LLC, have years of experience working with families, making sure their wishes are followed. You can be sure the documents we create with you for your estate, trust, or will are financially solid, obey all laws to the letter, and will be tailored to your specific needs in Manchester, Jackson, Toms River, Rumson, Sea Bright, Bay Head, Hazlet, Holmdel and throughout Ocean and Monmouth County.

By working with our estate attorney, you can avoid tax mistakes or unclear language in your estate plan. We believe every situation is unique and can build a plan with you that will keep your final wishes protected. If you are interested in planning your estate, call us today at (732) 812-3102 or fill out the online contact form. There is no time like the present to prepare for your future.