Chosing a Beneficiary of a Will or Estate

Protect the distribution of your Will and Estate

A beneficiary of a will is a person or entity that you choose to receive the proceeds from your Will, Estate Plan or Life Insurance. As well as being an individual or group of people, a beneficiary could also be a business, trustee or charity. If you decide to have multiple beneficiaries, you can then decide how the proceeds will be divided between them.

Careful consideration should be made when naming beneficiaries and you should identify them as clearly as possible, providing all their important details and contact information. This will make it easier for them to be found and reduce the chance of any Will contests.

There are two types of beneficiaries – “primary” and “contingent.” The primary beneficiary of a will receives your assets providing they can be found after your passing. Contingent beneficiaries receive your assets if the primary beneficiary is deceased or cannot be located.

If neither of the beneficiaries can be found, the Succession Act will determine which relatives will inherit your Estate. Legal proceedings could then delay the distribution of your Estate to these relatives, and the costs could diminish the amount available. So basically, you can’t be too careful when it comes to selecting beneficiaries in your Will and Estate Plan. Taking the extra time to specify how your wealth is to be handled if your beneficiaries have passed away or can’t be found will protect the planned financial distribution for the rest of your family.

Recently in Queensland, the late mining mogul Mr Ken Talbot kindly donated nearly a third of his fortune to charity. 70% of the one billion dollar Estate was to be shared among his widow and four children, while the remainder was to be donated to charity. Despite the fact that Mr Talbot specifically asked in his Will that “all beneficiaries are sensible and do not argue and demonstrate some give and take”, the Will was challenged by a family member. They claimed that some of the nominated beneficiaries had been inadequately provided for compared to the other beneficiaries.

This example brought to light two major problems facing current Estate distribution. Firstly, if there is money to be made from an Estate – lawyers, beneficiaries or those who feel left out will seize the chance to challenge the allocated amount, despite the wishes of the departed. Secondly, if a Will is not prepared properly and thoroughly in the first place, then any cracks in the documentation will leave it open to attacks that can tear families apart. This is why it is so crucial to take action with your Estate Plan as soon as possible and employ the help of specialists who want to put an end to destructive Will contests.

Even If you have an existing Estate Plan in place, it always pays to review it with a specialist (especially if it hasn’t been prepared by a specialist in the first place). As your life situation changes, so could your choice of beneficiary. Marriage, divorce or the birth of a child are all factors that could have a bearing on your initial selection. It’s a wise idea to regularly review your beneficiary designation with a professional, in order to make sure your choice is still appropriate. You have a moral obligation to see that the distribution of your wealth is reasonable and fair.

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