Do you have your beneficiaries named properly on all of your retirement and insurance products?

By May 24, 2017Uncategorized

Blog Entry for May 22, 2017

One of the largest areas of conflict results from a person not properly identifying his beneficiaries on his insurance policies or retirement accounts. Please check your beneficiary designations annually to insure that the people who you wish to inherit a particular asset is properly identified on that asset as a beneficiary. If your beneficiary is your spouse, it is a relatively simple designation on the policies or accounts. However, if your children are your secondary beneficiaries, extra care must be taken to properly identify the children to assure they receive their inheritance at the appropriate age. Children under the age of 18 cannot directly inherit these assets. Rather, the assets must be placed into a custodial account until the children reach the age of majority.
Therefore, if on your insurance policies and your retirement accounts you simply listed “your children” as the beneficiaries after your spouse, you must make sure your children have reached the age at which you want them to have full use of the money. If the children are under the age of majority or you simply do not believe they are mature enough to spend the money even if they have reached the age of majority, designate a trust as the beneficiary for the benefit of the children. Typically this is done by including a SIMPLE trust in your will for the children. If you do this, then the Trustee holding the proceeds, whether it is an insurance company or your IRA or 401k Trustee, will pay the money to the children’s trust. It is the Trustee’s duty to establish the bank accounts and manage the money under your guidance until the children reach the age at which the money is to be paid out. Therefore, have a lawyer review your will and other estate planning documents. Then, once every five years thereafter, review your will to make sure that it is still current, and addresses your desires appropriately. We are happy to help you review your current planning documents to ensure they meet your goals. Call us at Hughes and Associates, P.C. to help with these goals.

Leave a Reply