Beneficiary Designations
It all begins with an idea.
Here are some important tips to keep in mind when updating or setting beneficiaries for life insurance, retirement accounts, or investments:
1. Review Beneficiaries Regularly
Life Changes: Major life events such as marriage, divorce, the birth of a child, or the death of a previous beneficiary are good times to review and update your beneficiaries.
Periodic Check: Even without major life events, it’s wise to review your beneficiary designations every few years to ensure they still align with your wishes.
2. Designate Primary and Contingent Beneficiaries
Primary Beneficiary: The primary beneficiary is the person who will receive the benefits first. Make sure this is someone you trust to handle the assets responsibly.
Contingent Beneficiaries: It’s important to name one or more contingent beneficiaries (sometimes called secondary beneficiaries). If the primary beneficiary is unable to inherit (due to death or incapacity), the contingent beneficiaries will receive the assets.
3. Be Specific
Full Names and Information: When designating beneficiaries, be as specific as possible. Include the full legal name, date of birth, and, if possible, the National Insurance number of the beneficiary to avoid any confusion or legal disputes.
Percentages: If you’re naming multiple beneficiaries, be clear about how you want the assets divided. For instance, you can allocate percentages (e.g., 50% to one person, 25% to another) instead of specifying fixed amounts, which can fluctuate over time.
4. Consider the Impact of Inheritance Tax (IHT)
IHT Considerations: In the UK, life insurance proceeds can sometimes be included in your estate for inheritance tax purposes, unless the policy is placed in trust. Placing life insurance in trust allows the payout to bypass probate and be given directly to your beneficiaries, often without being subject to IHT.
Pension Benefits: Pensions are typically not subject to IHT, but it’s still important to review how they’re structured, particularly if your pension allows for a lump sum payout to beneficiaries.
5. Keep Beneficiaries Informed
Communication: Let your beneficiaries know that they’ve been named and explain your decisions to avoid confusion. You don’t need to go into financial details, but it helps to make them aware that they’ll be receiving assets and where they can find important documents.
Executor Involvement: If you have an executor, ensure they know where to locate beneficiary information and that your designations are up to date.
6. Coordinate Beneficiaries with Your Will and Trusts
Consistency: Ensure that the beneficiaries listed on your life insurance, retirement accounts, and investments align with the instructions in your will or any trusts you have set up. Inconsistent designations can lead to legal disputes or unintended outcomes.
Assets Outside of Your Will: Beneficiary designations on pensions and life insurance policies typically override what is stated in your will. Be sure that the people you name as beneficiaries are those you intend to inherit, even if your will says otherwise.
7. Update After Significant Life Events
Marriage and Civil Partnership: In some jurisdictions, a will can be invalidated by marriage unless specifically prepared in contemplation of marriage, but beneficiary designations on insurance and pension plans usually remain unchanged. Update these to reflect your new situation.
Divorce: If you go through a divorce, update your beneficiary designations immediately to ensure that an ex-spouse doesn't inadvertently receive assets. In the UK, divorce usually revokes a former spouse’s entitlement unless otherwise specified, but it's still essential to update your designations formally.
Children: When you have children, update your beneficiaries to include them if that’s your wish. Be sure to establish a trust or appoint a guardian if your children are minors, as they cannot directly receive assets.
8. Minors and Trusts
Setting Up a Trust for Minors: If you have children or other beneficiaries who are minors, consider setting up a trust. In the UK, minors can’t directly access the funds until they reach the age of 18 (or 21, depending on the type of trust), so naming a trustee to manage the assets on their behalf can ensure the money is used responsibly.
Guardian Appointment: If you’re naming a minor as a beneficiary, make sure you’ve appointed a guardian in your will who can oversee their interests until they’re of age.
9. Beneficiaries with Special Circumstances
Dependants with Special Needs: If you have a beneficiary with special needs, consider setting up a specific trust, such as a discretionary or special needs trust, to provide for them without affecting any means-tested benefits they may be entitled to.
Avoiding Direct Cash Inheritance: For beneficiaries who may not be financially responsible, consider a trust or appointing a responsible party to manage the funds on their behalf to ensure the money is used wisely.
10. Avoid Naming Your Estate as a Beneficiary
Bypass Probate: Naming your estate as a beneficiary can cause unnecessary delays as the assets will have to go through probate. Directly naming individual beneficiaries for life insurance and pension benefits allows these funds to be paid out more quickly and bypass probate altogether.
By keeping these tips in mind, you can ensure that your beneficiary designations are up to date, reflect your wishes, and offer the best possible protection for your loved ones. Taking the time to review and make adjustments when necessary ensures that the people and causes you care about most are looked after when the time comes.
Your Digital Legacy
It all begins with an idea.
The Digital Legacy Association is the professional body raising awareness and improving areas relating to digital assets planning and digital legacy safeguarding they have written a number of freely available guides to help think about each device. Links to them are:-
I have researched on the following platforms for their policies and processes around accounts of deceased users and these links take you to their own help pages with step by step guides.
Blog Post Title Three
It all begins with an idea.
It all begins with an idea. Maybe you want to launch a business. Maybe you want to turn a hobby into something more. Or maybe you have a creative project to share with the world. Whatever it is, the way you tell your story online can make all the difference.
Don’t worry about sounding professional. Sound like you. There are over 1.5 billion websites out there, but your story is what’s going to separate this one from the rest. If you read the words back and don’t hear your own voice in your head, that’s a good sign you still have more work to do.
Be clear, be confident and don’t overthink it. The beauty of your story is that it’s going to continue to evolve and your site can evolve with it. Your goal should be to make it feel right for right now. Later will take care of itself. It always does.
Blog Post Title Four
It all begins with an idea.
It all begins with an idea. Maybe you want to launch a business. Maybe you want to turn a hobby into something more. Or maybe you have a creative project to share with the world. Whatever it is, the way you tell your story online can make all the difference.
Don’t worry about sounding professional. Sound like you. There are over 1.5 billion websites out there, but your story is what’s going to separate this one from the rest. If you read the words back and don’t hear your own voice in your head, that’s a good sign you still have more work to do.
Be clear, be confident and don’t overthink it. The beauty of your story is that it’s going to continue to evolve and your site can evolve with it. Your goal should be to make it feel right for right now. Later will take care of itself. It always does.