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Why are beneficiary claims listed in percentages?

Many different types of investment accounts require you to name at least one beneficiary of your funds in the event of your passing. The same is true of wills created by California residents. Beneficiary designations are typically written in terms of percentages. Here’s why they’re done this way.

Percentages make for less work

When you name beneficiaries on your documents, many forms require you to name a primary beneficiary, plus secondary beneficiaries. These forms typically also request the names of one or more secondary beneficiaries. The amounts designated to each are typically listed in percentages when someone files beneficiary claims. Designating a percentage for all beneficiaries allows you to divide your assets into amounts that you feel are fair without having o recalculate the value annually. If your assets increase or decrease in value, the percentages will stay the same unless you decide to change them.

When determining beneficiaries, make sure that you clearly name each. You will not be able to use catch-all phrases like “my children” or “my heirs.” To avoid confusion, you may need to include nicknames if beneficiaries have similar names.

Creating your estate

Designating percentages is an important part of estate planning and administration. If you don’t designate percentages, the courts will automatically assume that you want to divide your assets equally among all heirs. Many people are unaware of how estates will be distributed after their passing, which is why you should start the planning process early.

Be aware that you don’t have to keep beneficiary percentages the same. Just as you can change your will and modify your estate plan, you can also modify beneficiary amounts adding or subtracting heirs and changing percentages for all of your assets. Periodically review your estate to ensure that it meets your needs.