Beneficiary Clause

A Beneficiary Clause Can Help Save Money On Your Estate

Do you know that a beneficiary clause can help save money on your estate? Often clients need to lower their potential taxable estate and there are many ways to do so, and a beneficiary clause is a relatively easy way. One area in which there is a beneficiary clause is  in a life insurance policy. The beneficiary clause or designation provision permits the policy owner to name anyone as primary and secondary beneficiaries. The policy owner usually may change the beneficiaries at any time.

Life Insurance can be an important part of a New York Estate Plan.  Insurance can be utilized to add tens of thousands of dollars to a persons overall estate value to be used to directly benefit a beneficiary or to pay expenses such as estate taxes.

Life insurance can be used to fund an Irrevocable Life Insurance Trust (ILIT) to take your life insurance out of your estate thereby potentially saving thousands in estate taxes.  Also, investments in retirement funds, such as annuities or IRA's typically have a beneficiary clause that can be used to name a primary or secondary beneficiary. This may avoid probate and thus save the estate additional costs.

Finally, you should periodically check your beneficiary clause in all your retirement accounts, life insurance and similar type of assets. Without doing this, you may find that your designated beneficiary is not who you think it should be. For example, if you have divorced, remarried or had children since your retirement plan account was established, you should update your beneficiary clause. If a long time ago you named a relative as your beneficiary, the relative may be deceased. Updating your beneficiary clause will prevent confusion and disputes and provide the estate plan your desire.

Such disputes or confusion can arise when a person prepares a Last Will and leaves his estate to a certain person but names a different person as the beneficiary of an asset such as a life insurance policy.  In this situation, the person named in the Will may receive no benefits because the life insurance will be paid directly to the life insurance beneficiary.  There may be little or no assets that pass under the Will.

When an estate plan is being formulated, New York Estate Planning Attorneys typically review all of a person's beneficiary designations so that there is no conflict between such documents and the provisions of the person's Will.

Additionally, beneficiaries under a Will generally receive assets that are left in the decedent's name alone, with no outside beneficiary designation.   Testamentary beneficiary dispositions in a Will can take many forms.  There can be specific bequests of certain property or more general dispositions where a person receives a percentage of the estate.  Every individual has specific desires and intentions as to the manner in which to transfer assets to family members and friends.  Utilizing appropriate beneficiary clauses and designations is essential to a successfully planned estate.

I have many years of experience successfully working with and advising clients in creating and executing plans that effectively express their personal desires regarding the disposition and protection of assets. I do this while providing potential tax advantages and security for family and beneficiaries. Regardless of the size of an estate, most adults — young and old — and their families benefit greatly from having a well-prepared estate plan consisting of documents such as a: Last Will, Health Care Proxy, Power of Attorney and Living Will.

To contact me regarding any questions or concerns call (212) 355-2575 or e-mail