Account and Insurance Designations

Banks and other financial institutions allow you to designate one or more people to receive the assets in your account upon your death. These are referred to as Pay on Death designations for regular banks and beneficiary designations for retirement accounts. Similarly, life insurance companies require beneficiary designations.  These designations enable you to transfer assets on your death without the assets passing through a probate proceeding. This process does not avoid the imposition of estate or income taxes that may be due on the transfer.  However, an estate plan may enable you to direct your accounts and insurance proceeds in ways that will minimize your tax liability.  You also may direct these funds to trustees for the benefit of your family or friends.  Many retirement accounts will be subject to income taxes, so an estate plan may reduce the amount of both estate and income taxes payable on your assets.