What happens to your assets after your death? It depends on what, if any, legal documents you have in place to direct the distribution of those assets. Generally speaking, assets can pass to beneficiaries through a few methods including intestate succession, beneficiary designations, a will, and/or a trust. Each method has its own benefits, costs, and quirks to consider when creating your estate plan.
Beneficiary designations are available for a variety of assets. The most common example is a bank account. The beneficiary designation allows you to specify who (or what) receives the asset (e.g., the contents of the account) when you pass away. Distributions to designated beneficiaries are carried out by the bank or other asset holder and do not typically require a probate court process. In many cases, this can simplify the passing of certain assets.
Beneficiary designation forms are important to fill out, as banks often have policies outlining default beneficiaries if no one is designated and these defaults may not reflect your wishes. However, it’s important to consider tax implications and other rippling consequences when making beneficiary designations as well. So while important to ensure beneficiary designations are made and kept up to date, they are best considered as cogs in the wheel of a comprehensive estate plan rather than ends in and of themselves.
We’re reviewing other methods of passing assets in past and future news posts, and the Oregon State Bar provides additional resources on estate planning. But if you’re wondering how all of this affects your personal situation and would like custom-tailored professional advice, please contact us now to begin exploring your estate plan options.