Legal Question in Wills and Trusts in North Carolina

If the 401(k) or life insurance or IRA has a designated named beneficiary, then when you die, the proceeds will pass to the designated named beneficiary. You should also name a contingent (back up) person in case the first person dies. Example: a life insurance policy might typically name a spouse and if he/she is not alive, then the children.

If for some reason both of your beneficiaries cannot take, then in that event the proceeds will be distributed to the personal representative of your estate.

Be vigilant about this - if one of the beneficiaries dies before you, then it may be time to revisit your insurance policy or 401(k) and name a new beneficiary.

A further caveat - money cannot be paid to minor children. If you have minor children, consider creating a trust in your will or existing revocable trust and make your trustee of the children's trust as beneficiary. That way you can avoid the funds coming into your estate and being subject to taxation.

I recommend that you sit down with an experienced estate planning attorney and make sure that your will/trust and designated beneficiaries are consistent with your overall estate plan and that it is what you want.