Many might not know or think about beneficiaries when it comes to financial planning, but it’s something that is vital.
Beneficiaries are people (or a person) that derive an advantage from something such as a trust, will or life insurance policy should someone die.
Nancy Hecht, financial advisor for Certified Financial Group, answers three key questions about beneficiaries.
1. Why is it important to have beneficiaries?
Without having any beneficiaries, someone’s money, should their life be cut short, would likely go somewhere they don’t want it to, according to Hecht.
“Do you want that money to go to a family member or friend, or the federal government?” Hecht said.
2. How can probate courts influence beneficiaries?
Hecht said if someone doesn’t have any beneficiaries for accounts such as savings, checking, retirement or life insurance, whoever gets those funds is decided by a probate court.
It can be a painful process.
“I can’t tell you now many times somebody has passed away and the current spouse has not been named the beneficiary,” Hecht said.
3. Can you name a pet as a beneficiary?
Believe it or not, many people try to do this. But the answer to the question is no, Hecht said.
A person has to be named as a “custodian” to the pet.
“Don’t name the pet directly,” she said.
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