Beneficiary designations are the quickest, easiest way for you to begin your estate plan. Most financial institutions (banks, brokerages, etc.) make it fairly simple to add beneficiaries to your accounts and/or assets. The Arizona MVD also has beneficiary designation forms for vehicles. Best of all, assets or accounts with designated beneficiaries will be transferred directly to those beneficiaries upon your death, bypassing the probate process.
Bank & Brokerage Accounts
It is typically a straightforward process to add a beneficiary to a bank or brokerage account. Some banks even allow you to complete this process through their online banking websites. Others, particularly Chase, may require you to go into a physical branch location in person to add or change beneficiaries. Regardless of the method, it is generally free to add beneficiaries to your accounts, and you can change them at any time. Don’t get confused over terminology – “beneficiary designation,” “pay on death,” and “transfer on death” all refer to the same concept.
Life Insurance & Retirement Accounts
These two types of assets receive special protection after your death so long as you have properly designated beneficiaries for them. Life insurance proceeds and retirement account balances are shielded from creditors in the probate process. That means that these assets, when they transfer to your beneficiaries, cannot be taken by creditors in order to satisfy any debts you may have owed. However, failure to designate a beneficiary can sometimes result in these assets being paid to your Estate upon your death, and this could potentially jeopardize any creditor protections they otherwise would have enjoyed.
Even if you have a living trust, we don’t typically recommend transferring title to your vehicles to your living trust. Instead, it’s usually better to utilize the AZ MVD beneficiary designation form. Using this form, you can simply list the vehicle information, owner information, and the desired beneficiary or beneficiaries. You will keep the form with the title to the vehicle. Then, after your death, it is a very simple process for your beneficiaries to go to the MVD and have the title transferred over to them.
Estate planning can seem like a daunting task, but adding beneficiaries to your accounts and assets is a good first step to get started. It’s usually quick, simple, and completely free to add or update your beneficiary designations. While they don’t eliminate the need for a comprehensive estate plan, beneficiary designations can protect certain assets and help them avoid the probate process upon your death. Take a few moments to review your accounts and either add or make sure your beneficiaries are up to date!