Many Pennsylvania estate plans fail to take into account beneficiary designations in an appropriate fashion. These designations play a critical role in the management of assets like insurance policies and retirement funds. Owners of these types of assets should appoint living people as beneficiaries with the exception of benefits intended for organizations like charities.
By designating beneficiaries, owners can decide who benefits go to after they die. Problems can arise, however, when circumstances change without people taking the time to review their documents. For instance, someone who finalizes a divorce may forget to remove an ex-spouse's name from a life insurance policy in the process.
Other problems can include situations like insurance policies naming beneficiaries who haven't reached the age of majority or referring to individuals who have already died. In some cases, people name trusts as beneficiaries, but it's important to note that doing so may have tax implications. In general, experts advise that the best people to name as primary beneficiaries are current spouses. It is common to designate children as secondary beneficiaries.
A lot goes into creating an estate plan that serves its intended purpose. Individuals who want to leave things behind for their loved ones have to ensure that their documents reflect their current circumstances and meet different legal requirements. Even when people think they are making the best possible choices, evolving legislation and other circumstances can cut into the amount of money or property their beneficiaries actually get to enjoy. Working with an experienced attorney might make it easier to anticipate and prepare for a wider range of potential outcomes.