Host: What are the problems with relying on beneficiary designations? Guest: The problems relying on beneficiary designations, is that beneficiary designations don t literally give us enough way to actually decide on what we want to accomplish. One of the basic rules in estate planning is, I want to give what I have, to whom I want, the way I want, when I want, and with the least amount of fees, and expenses and taxes. The problem with beneficiary designations is it s going to give property sometimes to people when they wouldn t be good people to receive it, or good time to give it to them. Take for example, a circumstance where somebody would have a life insurance policy.
Often a life insurance policy with name of spouse, or name of husband or a wife, as their beneficiary designee. As such, they have secondary beneficiaries, and the secondary beneficiaries were also listed as children of this marriage, or listing the names of specific children. If the husband or the wife predeceases, people most often don t go and change those beneficiary designations. And now we have often minor people, or very often, very young people, receiving large sums of money at a time that would be inappropriate. Most people do not believe it is a good idea to give large sums of money to 18 year olds, to 20 year olds, or perhaps even 25 year olds, but certainly we want to make sure that we are giving money to people when as if appropriate and having someone that we would appoint to be in charge of that.