What is a Beneficiary Designation?

Beneficiary designations allow you to transfer assets directly to individuals, regardless of the terms of your will.  Beneficiary designations are often made when a financial account, retirement account, or life insurance policy is established.  But, these designations should be reviewed periodically.

You can also designate your estate as the beneficiary.  In this case, the asset (retirement account or life insurance benefit) becomes part of your estate and will be distributed according to your will.

Finally, you can also designate assets as “per capita” or “per stirpes.”  Per capita means the assets are divided equally among all of your beneficiaries upon your death.  Per stirpes means that assets designated to a specific individual pass to his or her descendants if this individual dies before you.  So, if you designate your son and daughter to each receive 50 percent of an asset, if either dies before you, the share they would have received goes to their children.