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What are beneficiary designations and joint tenancy?

When planning your estate -- or dealing with an estate after someone passes away -- it's helpful to understand some concepts of estate law. Two important concepts are beneficiary designations and joint tenancy, specifically when right of survival is included.

Beneficiary designations typically occur when you assign a beneficiary to a specific asset. For example, when you purchase a life insurance policy, you select a beneficiary or multiple beneficiaries for that policy. The same is often true when you set up a retirement savings plan through your employer or create an IRA account. You might even find beneficiary designations in places you don't expect, such as your checking account. These designations usually mean that the assets associated with the account move automatically to the person you designate, though probate law might intercede with certain types of assets.

Joint tenancy occurs when two married people own an asset together. It's most commonly seen with mortgages and homes, but can also apply to checking and savings accounts. If the two people own the asset with joint tenancy that also notes a right of survivorship, then the asset is transferred to the surviving spouse automatically without going through probate in most cases.

When you are dealing with an estate plan, it's a good idea to review beneficiary designations and joint tenancy to ensure that all designations and estate plans are in line with each other. This keeps things from getting confusing and can help reduce the arguments or disappointments of beneficiaries in the future. Working with an estate law professional helps you ensure all such details line up to make a stronger estate plan that is more likely to serve you and your heirs well.

Source: Dummies.com, "Understanding Estate Planning Designations," accessed March 25, 2016

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