Beneficiary Reviews

According to ‘Investment News’, 80% of beneficiary forms on IRA accounts, defined benefit pension plans, 401k plans and life insurance policies are either BLANK, NOT FILLED IN PROPERLY or OUTDATED.  Beneficiary designations are very important as they trump Court Orders, Wills and Marital Law. 

For most people the choice of beneficiaries is simple: Spouse first, then children. For others it may not be that simple—or not stay that simple. Let’s see what we can learn.

The most common cases requiring beneficiary designation are on wills and trusts and on financial accounts like qualified retirement plans, annuities, etc. Some provide for “transfer on death,” which accom­plishes essentially the same thing.

Most people assume that if they die without designating a beneficiary, assets automatically go to their spouse, and then to their children. This may prove true, but the determination can require a costly, unnecessary probate process, tying up money in court for many months. It’s better to avoid that result.

Events like divorce and remarriage, and having children from two or more marriages can compli­cate beneficiary designations.  If you remarry, do you want all your assets to go to the new spouse, and then to the spouse’s children—perhaps some of them biologically yours, others not—rather than or in addition to your children from the previous marriage? Do you want to include step­children? If you have not remarried, do you want to include your ex-spouse?

Moreover, two types of distributions to children exist: per capita and per stirpes.

 I hope this brief general survey is enough to get you thinking about your own beneficiary desig­nations.

For the balance of this year, my office will be providing a complimentary review of your beneficiary forms.  Don’t penalize your loved ones, call our office to set an appointment for your review.  Deb will be happy to set your appointment.

While supplies last, receive a complimentary copy of our 2011 Retirement Decisions Guide at your appointment.

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