No matter the size of your estate, you likely store some of your wealth in financial accounts and institutions. Often, these accounts will let you nominate an heir—someone who will inherit the account and its contents when you die. These provisions are called beneficiary designations, and they are critical to your estate plan. 
Understanding Beneficiary Designations
Beneficiary designation arrangements are common. Some financial services and accounts require that the primary account holder nominate an heir or beneficiary. You may be asked to designate a beneficiary for:
- A life insurance policy
- A pension
- A checking or savings account
- An investment retirement account (IRA)
- A set of bonds
- A stock portfolio
Beneficiary designations are similar to other “payable-on-death” accounts; thus, while you are still alive, your beneficiary has no rights to access your account or assets. Once you pass away, they will receive the contents.
How to Choose a Beneficiary
Your selection of beneficiaries should be aligned with your existing estate plan. Your ideal beneficiary is someone you trust and someone you wish to provide for once you have passed away. Before nominating a beneficiary, you might want to consider the following questions:
- How does an intended beneficiary fit into my estate plan?
- Does my beneficiary have the life experience and mental capacity to receive a direct disbursement, or should I condition their inheritance through a trust?
- Would the proceeds from my account jeopardize an heir’s eligibility for government benefits or federal financial aid?
- Will California’s joint tenancy or community property laws affect my assets?
