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Virginia Beach Estate Planning Lawyer / Blog / Beneficiaries / What Is a Designated Beneficiary?

What Is a Designated Beneficiary?


Have you set up your retirement account with your employer or recently applied for life insurance? In either of these circumstances, you’ll need to choose someone to receive the assets inside these accounts/policies when you pass away. In general terms, this person is referred to as a beneficiary.

Completing aspects of your retirement plan requires you to name beneficiaries. A designated beneficiary is an individual who receives an asset like the proceeds of a life insurance policy or the balance in your individual retirement account after the death of the asset’s owner.

Per the Setting Every Community Up for Retirement Enhancement Act, the rules for designated beneficiaries have been narrowed and refined when it comes to the required withdrawals that must be taken from retirement accounts inherited from other people. A designated beneficiary is named on a policy or financial account as the recipient of the assets inside the account in the event that the account holder passes away.

A designated beneficiary must be a living person. A non-person entity cannot be a designated beneficiary even if the creator and owner of the account named a non-person entity. In order to receive the assets the designated beneficiary needs to contact the account manager to file a formal claim and provide a copy of the death certificate to receive their benefits.

Need more help with your Virginia Beach estate planning? Reach out to our office today to learn more.

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