Articles Posted in Beneficiary Designations

4.10.18The rules for IRA distributions can be complicated. Unforeseen circumstances can make things even more complex. Understand the rules, so the money goes where you want it to.

What happens if you designate each of your two adult children as 50/50 beneficiaries of your IRA, and then one of them dies? Will the funds go to your grandchildren?

MarketWatch answered that question in its article, “Who gets your IRA when you die? It’s not so simple.” The answer to what happens to the IRA money is dependent upon what the beneficiary designations say and when one of the children passes away. The beneficiary designations state how it will be distributed.  However, that may not be what is written in your will.

12.13.17With the number of late in life marriages among older Americans on the rise, it is best to address financial, legal and blended family issues before walking down the aisle.

We Americans like to be married. So much so that, according to the U.S. Census Bureau, about a third of us have tied the knot at least twice. While the trend for younger adults is to delay getting married or not to marry at all, the number of Americans age 55 and up getting married again is on the rise.

The Flagstaff (AZ) Business News recently published an article, “Financial Issues to Consider in Remarriages,” which suggests that you should be candid about your financial situation. Couples who are marrying for the second (or third) time frequently have financial baggage. You should eliminate issues later in the marriage by having open and honest discussions about assets, debts and obligations. Think about the following questions to get the talks started:

8.9.17Most life insurance companies are quite efficient.  However, you will need the right documents.

One of the basic tasks that follow the loss of a spouse or family member is figuring out what life insurance policies were in place and contacting the insurance company or companies to find out how to file for claims. How long it takes to receive the death benefit varies, but for the most part, insurance companies move quickly.

As a follow-up, what happens if the beneficiary doesn't know about the life insurance policy?

8.7.17Unless you really want to give your ex the proceeds of your life insurance or 401(k), it is best to take the time to do this one task.

If you haven’t looked at the paperwork for your life insurance policies, bank accounts, retirement accounts, investment accounts and any other asset that names a beneficiary, right now would be a good time to take a look—especially if you haven’t done so in years. The number of horror stories of assets going to untended people would surprise you. It’s such an easy fix that is all too often forgotten.

MarketWatch’s recent article, “Make this estate planning move right now: Check your beneficiary designations, explains how the Fifth Circuit Court of Appeals reversed the trial court by finding that a pension plan administrator didn’t abuse her discretion in determining that a deceased plan participant’s stepsons weren’t considered his “children” under the terms of the plan. As a result, the deceased participant’s siblings, not his stepsons, were entitled to inherit the plan benefits in Herring v. Campbell (5th Circuit 2012).

9.20.16If you are the beneficiary of someone’s life insurance policy, you should know that there are options as to how the policy funds, known as death benefits, can be distributed.

In most situations, the beneficiary of a life insurance policy does not have to pay income taxes on death benefits, according to a recent article in Forbes, “Are Life Insurance Proceeds Subject to Taxes?”

But depending on your situation, you might want to consider different options for that money that may be more productive in the long term. The insurance company can cut a check, but you can also have the insurer hold on to all or some of the funds and distribute them at a later date or in periodic distributions. If the money is held by the insurer, it will continue to earn interest—and that interest is taxable.

9.1.16You know you need life insurance to protect your loved ones. But do you know that having a will is equally important to protect against risks?

Without a will, your family faces a number of potential financial disasters. If you think you don’t need a will because you aren’t wealthy or only own one home, you may be surprised to learn how not having a will leaves your loved ones open to a number of serious and costly problems.

Nerd Wallet’s recent article, “5 Hidden Dangers of Not Having a Will,” lists some of the most challenging issues, reminding you why it’s so important to have an up-to-date, signed will.

7.15.16We often hear about families who squander fortune; we hear less about families that preserve their wealth and values over generations.

Successful entrepreneurs often struggle with estate planning when it comes to their children. Will knowledge of large inheritances to come create spoiled and unmotivated adults? How can wealth be shared across generations while fostering family values that include a strong work ethic and service to others? In a recent article appearing in Forbes, “The Successful Entrepreneur's Guide to Leaving a Financial Legacy That Won't Spoil Your Kids,” one family’s solution of passing along wealth and empowering generations of children is presented.

The family is one of the richest families in history: The Rockefellers. Their fortune is still going strong today—six generations later. They maintained their fortune by creating trusts to protect the family wealth. Trusts can have specific rules for determining how and when heirs are allowed to access money. This is the key to giving your children access to funds without eliminating their potential to achieve success on their own. Many times entrepreneurs fear leaving their children a large sum of money, but a trust lets you attach some strings.

7.5.16Whether your love is animal rights or protecting the planet, a trust donation creates a legacy that reflects your values and supports the future.

A woman’s love for animals was reflected in a significant trust donation given to the Little Rock Zoo, as reported in The Northwest Arkansas Democrat Gazette article, “Animal lover leaves Little Rock Zoo nearly $3M, biggest gift ever.” A trust created an endowment fund, the Jayne and Fletcher Jackson Foundation, which will fund many programs at the zoo for years to come.

"Animals are what made her happy,” a zoo representative commented. “It was no surprise after we got to know her that the zoo was what she wanted to leave her estate to upon her passing."

6.17.16We never know what's around the corner. Big changes come in all different types. Best strategy: be prepared and deal with whatever comes.

Of those Americans who actually have a will and an estate plan in place, there's still a tendency to let years go by before they update their wills and finances. Any good Houston estate attorney will tell you that a will needs to be updated every three or four years to take advantages of any changes in the law and to address any life changes that occur.

The Middletown Transcript warns in "Game-changing life transitions that need attention" that sudden transitions need to be addressed immediately. However, many times these events will have more complex consequences impacting other parts of your life. Don't stick your head in the sand when such an issue comes up. Deal with it in the context of your overall life.

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