One of your goals in making an estate plan is ensuring that your property makes its way into the hands of the right people when you pass away. To this end, you most likely have in mind the names of the people you’ll name as beneficiaries in your Will or Living Trust. However, for each beneficiary you name, you’ll also want to name an alternate beneficiary.
Why Name Alternates?
In case your primary beneficiary passes away before you do (and you haven’t had a chance to update your estate plan), then you’ll be in control of who that beneficiary’s inheritance passes to. So, for example, instead of simply stating that your sister is to inherit your car, you can name your sister as primary beneficiary and name your niece as alternate beneficiary. This way, if your sister passes away before you do, there’s no need to re-do your estate plan, and you can ensure that your car still goes to a person of your choosing.
What if There’s No One to Name?
What if you only have one beneficiary, and there’s no one you want to name as an alternate? If you don’t name an alternate, there can be a couple of different outcomes that might not be to your liking. If your beneficiary dies before you and you have living relatives, then your assets may be distributed to those relatives on the basis of state law. If your beneficiary predeceases you and you leave behind no living relatives, than there’s a chance your property will end up in the hands of the state. In order to avoid these potential outcomes, you might want to consider naming a charity as alternate beneficiary.
- Thought of the Day - October 5, 2022
- Thought of the Day - September 28, 2022
- Death and Your Digital Footprint - September 21, 2022
