It isn't uncommon for Pennsylvania residents to use beneficiary designations for 401(k) or 403(b) assets. Designations can also be used on a variety of other assets, including cars, houses or boats. It is important that these designations are made carefully to avoid negative or unintended estate planning consequences.
One common mistake is failing to make a beneficiary designation at all. This could result in the company that oversees the account deciding who gets the remaining assets. Another key mistake that people commonly make is not updating a beneficiary designation form. For instance, a former spouse may no longer be the intended beneficiary after a divorce. However, if that spouse is named on the form, he or she will typically receive it regardless of the estate owner's wishes.
This is because the beneficiary designation will override whatever a person puts in their will. As such a designation carries a lot of weight, individuals will ideally go over their beneficiary designations with the help of outside advisers. Doing so can help to make sure that they are making the right decision as well as declaring their wishes in a proper format. With proper guidance, it is easier to remain in control of money and other assets during life and after death.
Estate planning can be beneficial for any adult, regardless of their age or income. The use of a beneficiary designation may allow an asset to be transferred without the need to go through probate. This may prevent family infighting or other conflicts as the transfer could be made without making it public. An attorney could help a client understand this and other estate planning strategies.