A beneficiary is someone who receives an asset of yours after your death. There are a few types of beneficiaries whom you could incorporate into your Indiana estate plan to help ensure that your property goes where you would want it.
1. Primary beneficiaries
The primary beneficiary is first in line to receive the designated asset. They will receive it unless they die before probate has completed. Probate typically takes six months to one year but could take longer for complex estates.
2. Contingent beneficiary
The contingent beneficiary receives the designated asset if the primary beneficiary dies before probate has finished. When you don’t name a contingent beneficiary in your estate plan, it will be distributed in accordance with state law.
3. Number of beneficiaries
Indiana doesn’t have a limit on how many beneficiaries you can name. If you name more than one primary beneficiary, then they equally split the asset. This may work easily for cash accounts but not so much for physical property unless you intend for them to sell it. When more than one person tries to share ownership of an asset, conflict often arises.
Indiana allows you to name charities as beneficiaries. If you leave a retirement account or an annuity to a charity, it doesn’t need to pay taxes on it. Other types of beneficiaries, however, may still have to pay taxes on those assets.
5. Conflicting information
If you name one person as the beneficiary of a retirement account and another as the beneficiary in your will for that asset, then the will can’t override the financial account’s beneficiary. It’s important to update both documents at the same time to ensure clarity on your wishes.
Having both primary and contingent beneficiaries accounts for situations in which one of your beneficiaries dies during probate.