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How to choose a primary beneficiary?

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How do you choose a primary beneficiary?

This is a basic estate planning problem, and you’ve got to figure this out before you can really do anything else. So that is what we were discussing today. How to choose a primary beneficiary. I’m Sarah Siedentopf. I’m an estate planning and probate attorney in Atlanta, Georgia. And the first thing that we need to think about when we talk about designating a beneficiary, is trusts versus retirement plans and those sorts of things.

For trusts, we’re gonna use the same word, beneficiary, as we use when we say beneficiary designation with a retirement plan, something along those lines. And with a trust, we can designate whoever we want. The trust can have a trustee set up to manage the money. So if the person is underage, however that works out, choose the person you want to benefit. Oftentimes that will be a spouse first, and then children. But if your family is set up differently, or your spouse has already got plenty of assets of their own, you may be going straight to children, or straight to friends, or straight to charities, anything like that. Whatever you want goes, as far as beneficiary designations for your trust.

When we start thinking about the retirement plan, and that beneficiary designation, those things also go outside of probate. So whoever you write down there, receives the assets without having to deal with probate. But if they are under the age of 18, we’re gonna have a problem. So you might not want to name an individual who’s under the age of 18. If you want it to go to them, you might want to name the trust, and make them a beneficiary of the trust. And then reconsider this when they turn 18 or 25, or whatever age you would want the money to go directly to them. The other thing that comes to mind for when you might, or might not, want a beneficiary designation, is money management.

So often again, the base choice is directly to a person. But if you know that person does not make good choices, this money isn’t going to last, that’s another time that you’re gonna consider designating a trust, who will then give them the money based on whatever trustee choices. Someone who is wise, and will help that money last. So those are some of the things that you think about. Obviously there could be other factors. But primarily age, and whether there are any management needs from a trust are the big things that we’re thinking about, as far as those go. I’d be glad to talk to you about this more. Please give me a call. And also I’d be happy to hear your comments. Thank you.

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