News & Events

September 15, 2013

Six Worst Mistakes to Make with Beneficiary Designations

Beneficiary designations are a critical, though often undervalued, aspect of estate planning. Clients need to understand that a well drafted will or trust is generally insufficient to control the beneficiary of their retirement plan or IRA. Only a properly completed and accepted beneficiary designation can ensure that a client’s wishes will be met.

Here are the worst mistakes:

  • Not having any beneficiary designation. Often the biggest error is not having a beneficiary designation at all. Anyone with a retirement account should have a designation, regardless of the account’s value. Of course the importance of the tax planning inherent in a well-drafted designation is proportional to the amount of plan assets. Many clients and attorneys are surprised to learn that plan and IRA documents set forth default beneficiaries. A common default beneficiary is the “estate,” which is undesirable because it does not allow payments to be “stretched” over the life of the beneficiary. Other common defaults may effectively disinherit certain family members or otherwise produce results counter to the plan owner’s wishes.  
  • Not selecting contingent beneficiaries. To avoid the default provisions, it is important to select alternate beneficiaries in case the primary beneficiary does not survive. The best designations are structured from the outset to account for the death of each beneficiary. 

...

DOWNLOAD FULL ARTICLE >

News

March 21, 2023

Michelle Chapin’s Article on the Use of Arbitration Causes in Trusts is Published by the MSBA’s Estate & Trust Law Section

Michelle Chapin, a Principal in Paley Rothman’s Estate Planning department, authored an article titled "(Un)Enforceability of Arbitration Clauses in Maryland Trusts" in the MSBA's Estate & Trust Law Section Newsletter Volume 29 Issue 1.

Read More

Blog

Sec. Deb Haaland – First Native American in the Cabinet

Sec. Deb Haaland is the first Native American to serve in the President’s cabinet and has been instrumental in bringing attention and action to the horrific incident rate of...

Read More

Resource Center

Paley Rothman shares this library of resources with clients and friends of the firm to help them stay ahead of legal and business developments and trends. Here, you will find helpful tips and tools written by our attorneys and relevant to our areas of practice.

Read More