Georgia residents who are preparing their estate plans should keep in mind that any beneficiary designations they have made will override contrary bequests in a will. Assets from bank accounts, life insurance policy proceeds and retirement accounts may be passed on by beneficiary designation. Therefore, it is important to coordinate beneficiary designations and other aspects of estate planning.
There is an advantage to beneficiary designations. These assets do not have to pass through probate, so they will be distributed more efficiently to beneficiaries. However, beneficiary designations that clash with plans laid out in a will or other estate planning documents may result in a lack of funds for other bequests. Other issues may arise if a beneficiary has died. For example, if a spouse named as beneficiary on an IRA has died, the account does not pass to the children automatically. It becomes part of the overall estate. Then, children must pay tax on it, and they cannot take IRA distributions throughout their life.
The best strategy is to make or review beneficiary designations at the same time that the rest of the estate planning is done. Then, beneficiary designations should be reviewed no less than every few years as well as whenever there is a major change in the family such as a birth, death, marriage or divorce.
Estate planning can be a comprehensive process. In addition to coordinating wills, beneficiary designations and trusts, it is also important to prepare for becoming incapacitated. People might want to use a power of attorney to appoint someone to handle their financial matters in this situation. They may also want to name someone to make health care decisions for them. An attorney can often suggest other estate planning tools that could be appropriate.