Certain assets, such as insurance policies and retirement plans, are transferred at death by means of a beneficiary designation.

The beneficiary of your life insurance policies may be your trust so that the proceeds will be made payable to it. The advantage of naming your trust is that the trust will provide more flexibility and options than naming an individual. For example, the trust will identify more complete contingent beneficiaries in the event one or more of your primary beneficiaries predecease you. In addition, the insurance proceeds may be a good asset to fund trusts established at your death for the benefit of a spouse and which escape estate tax upon the death of your spouse.

Retirement plans, including IRA accounts, and 401k plans, have special income tax features, for this reason, if you’re married, the primary beneficiary is typically your spouse. It is important to remember to add a contingent beneficiary, usually your trust or your children.