You may reap the benefits of your retirement account once you take your final exit from the workforce. But what is usually the case, and what may apply to you, is that participants of retirement plans sadly pass on with funds still in their accounts. This is when death benefits kick in. Specifically, death benefits are what you would have been entitled to. But, upon your unfortunate passing, this is what is instead paid to your designated beneficiary in the form of a lump-sum distribution or an annuity. With this in mind, continue reading to learn who you can name the beneficiary of your retirement account and how an experienced New York City estate planning attorney at Zimmet Law Group, P.C. can help you select the appropriate party.
Who can I name as the beneficiary of my retirement account?
Most retirement benefits providers make your surviving spouse the default beneficiary. However, under New York State estate law, you may have just about any person or entity serving as the beneficiary of your retirement account. This is, of course, so long as you explicitly declare them on your account.
A common approach that participants take is naming their surviving spouse as their primary beneficiary and another close family member as their contingent beneficiary (i.e., child, grandchild, etc). This may be so that your contingent beneficiary is set to receive these funds in the unfortunate event your spouse passes away before you.
Also possible, you may name your established trust as the beneficiary of your retirement account, and then your loved one as the beneficiary of your trust. This may work out better if you anticipate your loved one to still be of a minor age at the time of your death, or if they are otherwise financially irresponsible. This is because these funds may now be under the watchful eye of your reliable trustee.
Lastly, you may name your favorite charity or another organization as the beneficiary. This may be so to reap certain tax benefits.
What happens if a beneficiary is not listed on my account?
There may be a little hiccup if you do not have a surviving spouse and otherwise have not listed another beneficiary for your retirement account. That is, in this case, your retirement account may go to your probate estate. Then, your executor may distribute your death benefits to the beneficiaries listed in your will. But if you pass on without establishing a valid and enforceable will, these benefits may be administered following the New York State intestate succession laws.
At the end of the day, if you have any lingering doubts about your estate planning decisions, a skilled New York City estate planning attorney can help relieve them. So whenever you are ready to start, please reach out to the Zimmet Law Group, P.C.
