When creating your estate plan, the beneficiaries are one thing you need to put a lot of time, effort and focus toward. After all, beneficiaries make up an important part of your estate.
But what are beneficiaries, exactly? And who are they? Can you choose anyone at all to be a beneficiary, or should you only select close friends or family members?
What is a beneficiary?
Forbes discusses ways in which you can choose the right beneficiaries. A beneficiary is someone who will benefit from your estate in some way after your death. Most people think of beneficiaries as the individuals you write in your will to receive certain portions of your estate. However, a beneficiary can also be someone who gains something from your trust. It can even be someone you list on a life insurance policy.
Thus, you want to ensure that you choose your beneficiaries carefully. Generally speaking, you will want to leave most if not all of your assets to close friends, family members, mentors or any other figure in your life who has done something for you. A charity or group that does work related to goals you care about may also act as beneficiaries in your will.
What should you keep in mind when choosing one?
However, there are some things you want to keep in mind when choosing beneficiaries. For example, you likely do not want to leave a minor as the recipient of your life insurance money. If you want to leave money to a minor, most people will do this through a trust. This way, you can regulate how many assets they have access to until they reach legal adulthood.
It is sometimes hard to decide how to portion out your estate. If you need guidance, consider seeking legal help.