By designating your beneficiaries, all of the assets that you have worked to save throughout your lifetime will be transferred to your heirs, and often without going through probate. Assigning one or more beneficiaries is most often considered for retirement plans, annuities and life insurance policies. The beneficiary designations are applied immediately upon death and override a will, thus avoiding probate.

When determining your beneficiaries it is important to consider the primary beneficiaries and the percentage of your assets that you would like to pass onto them, as they are the first to inherit your assets. Secondary beneficiaries can also be named in the case that your primary beneficiaries have already passed away.

Here are a couple of things to consider when choosing beneficiary designations:

• In most cases, spouses inherit assets without estate taxes as well as avoid mandatory taxable payouts for retirement accounts.
• Children under 21 years of age may not be able to directly inherit assets from annuities, retirement plans or life insurance policies. In this case, setting up a trust may be necessary.