David Kanani, president of Kanani Advisory Group, shares the important considerations to keep in mind when designating a beneficiary of a life insurance policy.
According to David Kanani, choosing a beneficiary can be very simple, yet very important in any account that requires it. “If one is married, unless there are very unusual circumstances, your spouse should be the beneficiary, especially if you live in a community property state,” says Kanani.
This could be more difficult and needs more thought if you are not married or when choosing a contingent/secondary beneficiary. For example, if you have minor children, it is recommended to have your trust as beneficiary. If you have a disabled family member, you should consider a special needs trust. If you don’t have a trust, as a last resort, you can name an adult family member, i.e., parents, siblings, or any other trusted person. If you name an adult family member, keep in mind that once the proceeds are paid, those funds legally belong to that individual. Therefore, you must have extreme trust that the family member you name understands that the funds need to be used for the intended minor child/children.
Finally, when making your decision, do it as if this account would be paid out tomorrow. Changing beneficiaries can be a simple task. Do not worry about years down the road. Plan as if something can happen tomorrow!
It’s always recommended to consult with an estate planning attorney.
To learn more about Kanani Advisory Group and its holistic financial planning approach, please visit www.kananiadvisorygroup.com
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