Legacy is what we preserve. And proper documentation and planning are what we all need to perceive. Generally while listing beneficiaries, we tend to be quite traditional in our approach. However, it may seem to be working throughout the generations, times are changing as we breathe. Here is what you need to keep in mind while designating beneficiaries.
Name a beneficiary in time
Most of us don’t realize a proper time or are too much busy with our daily commitments to shed a light on our assets and inheritance. You should name your beneficiary as soon as you think they understand the concept of assets, and liabilities and understand the importance of perseverance in inheritance. If you don’t list beneficiaries, then the finance company will go on following their conditions and proceed your property to the probate estate. This means, your family has to hire a lawyer and go to court and probate your estate and claim the figure.
Keep a backup contingent.
While you have your primary beneficiary duly listed, you should consider listing a secondary or contingent beneficiary. Life is always uncertain. What if your primary beneficiary, say your wife dies before you or perishes with you. There will be the contingent beneficiaries, say your children, to inherit your proceeds. This is the kind of insurance that your life savings. And it won’t be spared to the estate.
Update your beneficiaries.
In a country like India, we see numerous examples of hope life has been tough for the elderly after their children inherit the benefits. This puts light on revocable beneficiaries. Yes, there is an option to revoke any beneficiary if the situation goes haywire. This means you can replace or eliminate, or adjust your beneficiaries according to your will, and they will have no say in it.
Refrain from designating a minor as a beneficiary
If you don’t have an adult to take care of your proceeds after you’re gone, you should consider making a trust fund and then naming the child/ underage as a beneficiary to the fund. Otherwise, the law would appoint a legal guardian as the custodian of the child and beneficiary to your property until the child comes of age. A big thing to consider.
Typos and misspelled names
Whenever we name our beneficiaries, we tend to get submerged in the minute details on the papers. Sometimes, due to immense workload, typos and wrongly named individuals take place while drafting. You should thoroughly check and proofread the draft because, when you’re gone, These faulty spelling can prove a big legal problem for your beneficiaries.
Review your designated beneficiaries with financial and legal advisors.
You have named your beneficiaries, and you are taking a rest. That’s not how estate planning works. You need to continuously evaluate and review your beneficiaries to adjust and choose necessary updates. Planning is a continuous process that must be undertaken precisely and seriously.
Being specific to every statement
Being vague in a legal statement is possibly the worst mistake you can ever make. And when it comes to inheritance and financial documents. Any confusion should be disbarred completely. For example; you should write “children” or “my child” as a beneficiary. What if you have many children. Who is going to decide who will get how much? Or what if your child dies, and another distant relative takes a chance to snatch the money? These problems arise whenever statements are drafted. So, refrain from any pronouns, metaphors, or verbal gestures. Be specific about every detail and define the same to the core.
Understanding the fluctuations
Suppose you have named more than one beneficiary. And one of them has a creditor issue or possibly dies before you. Now, what will happen to their share of the procedure? Will it go to their children or will it be shared with the other beneficiaries? If the latter, in what ratio? If the former, how? These are some friction-causing elements. So you need to specify what happens in these special circumstances before finalizing a draft.
Don’t do it yourself
Generally, designating beneficiaries can seem like an easy work of drafting and understanding legal bounds. But this is a very complex piece of information that needs to be specified. And should be done under an attorney at law and an experienced attorney drafting personnel. So that there are multiple angles of drafting and checking, to minimize any hindrance.
Normally, there are numerous ways to save on inheritance tax. But don’t try to exploit the relaxations. If you do so, your beneficiaries may have to face tax-related issues and resulting in an ultimate loss. So it’s better to understand and use tax benefits to your advantage and become sincere about where you should pay.