For North Carolina residents, estate planning is a vital part of being prepared and organized for the future. This is true whether it is a person who has significant assets or someone of more modest means. The goal of an estate plan is to ensure that the loved ones and other potential heirs get what the person wants them to get. However, there are important factors to remember. Those who are taking the steps to have an estate plan that covers all the bases for their needs might inadvertently forget about certain aspects. One is their 401(k) plan. Picking a beneficiary and making sure that person receives the remainder of the account requires some attention.
If money is still in the 401(k) when the person dies, it will subsequently pass on to whomever is named as the beneficiary on the account. It is important to note that this will generally supersede what an estate plan says, so the estate plan will not have a bearing on the beneficiary of the account. There are ways to make sure the intended person gets the proceeds. Assigning a beneficiary lets that person receive it without it being necessary to deal with the will or other documents. Most people will want someone who is named in their will to receive what is left in the 401(k), but it can be anyone and that person should be named.
Contingent beneficiaries should be named if the primary beneficiaries have died or are not able to receive the remainder. There should be a list with the beneficiaries and a percentage of how much they will get. Failing to name someone will mean that it will go to the spouse. If there is no spouse, it will go to the estate. When there is a major event like a marriage, a birth, a death or anything else, the document should be updated. Finally, the beneficiaries should be informed of the accounts so they are prepared to take the necessary steps to receive the inheritance. As this is separate from what is in an estate plan, it might not be revealed during probate.
This falls into the area of estate planning and should be fully understood when preparing for the future. A law firm that is experienced with all areas of estate planning should be contacted so everything is organized and there is less of a chance of confusion and disputes.