Beneficiary Designations

A Love Story: George and Barbara Bush

Published on: January 2, 2019 | By McCulloch & Miller, PLLC

Their lives were devoted to family and public service, and to each other. The passing of George H.W. Bush and his wife gave many Americans pause to consider their leadership and their devotion.

Few were surprised when George H.W. Bush passed less than eight months after Barbara’s death. Their deep connection—from his service in World War II to the Presidency and their role in public service after leaving the White House—was evident to everyone around them, says Forbes in the article, “Valuable Estate Lessons From The Passing Of George And Barbara Bush.”

The death of a longtime married couple in quick succession, is often called “broken-heart syndrome” or “widowhood effect.” The thought is that the lives of two people are so entwined they can’t bear to be without each other. The time between the Bushes’ deaths also raises practical questions in estate planning. Timing is critical in an estate plan, and if the deaths of married spouses happen within a short period of time, it can make the administration of an estate more difficult.

Is Your Estate Plan Working for You?

Published on: December 20, 2018 | By McCulloch & Miller, PLLC

Remember that estate planning is not just for the wealthy, and now that the federal exemption is so high, not just for the billionaires either. Estate planning is also much more than a will.

Your estate plan has a lot of work to do for you, both while you are alive and for your family when you have passed. A good article that explains it all comes from Investopedia, “How to Get Your Estate Plan on Track.” There are three key objectives that your estate plan needs to do:

End-of-life health care decisions are documented in a legally binding document;

One Dozen Must-Have Documents

Published on: November 6, 2018 | By McCulloch & Miller, PLLC

To make sure that your wishes are carried out, you’ll have to do your homework. Make sure that you cover these most important documents.

The last thing you want to do, is leave a bureaucratic mess for your loved ones when you die. Not only will it cause the family stress during a difficult time, it could change how your family thinks of you. That should be more than enough reason to get this done in advance!

US News & World Report’s recent article, “12 Documents to Prepare Now for Your Heirs,” says that when people don't have their paperwork ready, it can be a huge headache for the family. A family can be left with all kinds of paperwork to sort out while dealing with grief. Even worse, heirs may forfeit life insurance proceeds and tax deductions or overlook accounts they don't know exist. That's why it's critical to have important documents ready for loved ones. Here are the documents you should start preparing right away:

When Was the Last Time You Reviewed Beneficiary Designations?

Published on: September 1, 2018 | By McCulloch & Miller, PLLC

Talk about a train wreck waiting to happen: beneficiary designations from three or four decades ago can really create a problem for your heirs—or those you thought were your heirs.

Most people fill out beneficiary forms when they start a new job, open an investment account and open bank accounts. Then they forget about those forms—often for decades. Those people named as beneficiaries way back when, are now their heirs—whether they want them to be or not.

Wealth Advisor’s recent article, “Designated Survivor: Beneficiary Designations Can Make–or Break–Your Estate Plan,” reminds us that beneficiary designations override the terms of your will or trust. To avoid any unintended consequences, it’s very important to review your designations with your estate planning attorney. Think about the following:

Proper Planning for the Distribution of an IRA

Published on: April 10, 2018 | By McCulloch & Miller, PLLC

The 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.

How Can a Roth IRA Reduce the Tax Burden Facing Your Heirs?

Published on: October 30, 2017 | By McCulloch & Miller, PLLC

There’s more than retirement savings power in a Roth IRA. Used properly, it can help cut your beneficiary’s tax liability, regardless of if and when tax reform becomes reality.

If you’re interested in reducing the taxes your heirs will have to pay, you’re probably concerned about the discussion about tax reform going on in Washington these days. Unfortunately, there’s no way to be certain what, if any, changes will actually occur. In the meantime, your estate planning attorney can help you structure your estate, so that less of it ends up being consumed by taxes. That includes moving funds into non-taxable accounts, including Roth IRAs.

Motley Fool’s recent article, “A Clever Way to Cut Your Heirs' Income Taxes,” says the money you put into a Roth retirement savings account has already been taxed. It was taxed on the contributions you made or as a rollover from a tax-deferred retirement savings account. As a result, everything in that account is now non-taxable for income-tax purposes. As the Roth has been open for at least five years prior to your death, the money in that account won’t be subject to federal income taxes.

How Long Does It Take to Get a Payment from a Life Insurance Policy?

Published on: August 9, 2017 | By McCulloch & Miller, PLLC

Most 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?

Estate Planning 101: Check Your Beneficiary Designations

Published on: August 7, 2017 | By McCulloch & Miller, PLLC

Unless 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).

How are 401(k)s and IRAs Different?

Published on: August 4, 2017 | By McCulloch & Miller, PLLC

New regulations from the Department of Labor may come into play for Americans deciding which type of account is best for their retirement savings.

There are significant differences between 401(k)s and IRAs, and as reported in a recent post on wjbf.com, “Advantages and disadvantages to a 401k and an IRA,” a number of new regulations from the Department of Labor makes this a good time to review the pros and cons of these popular retirement savings plans.

401(k): A 401(k) can potentially be less expensive than other investment vehicles, due to the number of participants. Many also have a loan provision for access to your principal, if you need it in an emergency. If you retire early, qualified plans may have an age 55 withdrawal privilege that gets you around the 10% withdrawal excise tax provision. However, if you’re still working, you may be able to push back your required minimum distribution (RMD), if you’re over age 70 and still participating in the plan. You’ll also have creditor protection in the typical qualified plans. Those are some of the general positives.

Your Mid-Year Estate Planning Checklist: 10 Things You Should be Doing Now

Published on: June 29, 2017 | By McCulloch & Miller, PLLC

Here is a helpful checklist of the top ten ways to keep your estate plan current.

Review your existing Will and any trust agreements. Over the course of a year our personal and our professional lives can change dramatically. Tax laws and regulations are also subject to change as new political administrations come into office. It is therefore important to periodically make sure that your documents will work the way you want them to. Some questions to ask: Is your plan tax efficient? Do you need to make any changes about the timing and manner in which your assets will transfer to your beneficiaries? Do you need to change any beneficiaries or add anybody new? These are all basic questions to keep in mind when reviewing your existing documents.
Consider whether your named fiduciaries are still appropriate. Your executors and trustees will be tasked with some significant responsibility. You should consider whether the persons you appointed in your documents are up to the tasks that lie ahead of them or if an alternate person or persons should be appointed.