Beneficiary designations in Kenya

Last updated on August 24th, 2024

A beneficiary designation is part of estate planning that lets you name the person or persons who will inherit your wealth after you die. Beneficiary designations are standard in: 

• financial accounts, 
• retirement accounts,
• brokerage accounts, and 
• life insurance  

For example, you must complete a beneficiary designation form when taking up a life insurance policy. This form names the person or persons who will inherit the benefits in your policy when you die. Most beneficiary designations are completed during account opening. 

Considerations when choosing or updating your Beneficiaries

After completing the beneficiary designation form, you often don’t receive regular reminders. This makes it difficult to remember what’s assigned. 

Like any other estate plan, you must regularly review and update your beneficiary designations.  

The following four factors are critical as your life desires and relationships evolve.

1. Estate planning goals

Your estate planning objectives may change from time to time. Your wishes may also vary. And even your wishes may not follow sudden changes in the law. As such, you may need to update the list of your beneficiary designations regularly.

Also, ensure all beneficiaries are consistent with your other estate planning tools, such as wills and trusts. 

We recommend you create a list of all relevant accounts and their beneficiary designations and set reminders to review. This could be upon any life event. This includes marriage, remarriage, divorce, separation, childbirth, beneficiary death, etc.

2. Family setup changes

The family setup may change due to various reasons. You may be divorced or separated. Or you are recently married. Or relatively recently remarried. Those family setup changes must be considered when designating and updating beneficiaries.

3. Children under 18 years

Children under 18 years are minors under the laws of Kenya. They don’t qualify to inherit financial accounts or life insurance proceeds directly. If you name a child under 18 years as your beneficiary, the court will appoint a guardian on behalf of the child.

The court process may take a long time and pile extra expenses over the estate when you die.

We recommend that you name a trust or a reliable adult to manage your assets when you die instead of a child.

4. Charitable giving goals

If you care about supporting charitable causes, name a charity as your beneficiary. The charity can receive the entire payout or get a certain amount or percentage of your wealth.  

5. Contingent beneficiaries

Besides your primary beneficiaries, it’s also vital to consider contingent beneficiaries. If your primary beneficiary dies, a contingent beneficiary takes their place. The contingent beneficiary enters the primary beneficiary’s shoes and receives the benefits.

Regular updates on your list of contingent beneficiaries are thus necessary.

Could you need some help in ensuring your beneficiaries are in line with your wealth protection goals and estate planning objectives? Creative Planning is here for you. Contact us today, and our Estate Planning lawyer will reply. Or, call Kubwa & Co Advocates directly at +254728607818 or email info@kubwaadvocates.com

This Legal Tip of The Day is for general information only; the opinions and arguments here are of the author and do not reflect the official views of Kubwa & Company Advocates. Be sure to seek specific legal advice on the subject matter. If you have any questions on the same, please do not hesitate to contact kubwa@kubwaadvocates.com