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The term "next of kin" in finance often refers to the person's nearest living relative who would get their assets upon their passing. Depending on the individual's particular circumstances, this can be a spouse, child, parent, brother, or another close family member.
It's common for people to name their closest relatives as the beneficiaries of their bank accounts and insurance policies, as well as the executors of their estates in their wills. As a result, their estate will be dispersed in accordance with their preferences, and their loved ones will be taken care of after they pass away.
People should carefully examine who they name as their next of kin because doing so might have serious financial and legal repercussions. For instance, if a person passes away without a will or named beneficiaries, their assets might be divided in accordance with state law, which might not suit their preferences or the requirements of their loved ones.
Making a close relative the beneficiary of a certain account or insurance policy may also have tax repercussions because some inheritances may be subject to estate or income taxes.
