{"id":2220,"date":"2013-02-06T12:47:40","date_gmt":"2013-02-06T17:47:40","guid":{"rendered":"http:\/\/www.billlosey.com\/?p=2220"},"modified":"2013-02-06T12:47:40","modified_gmt":"2013-02-06T17:47:40","slug":"the-right-beneficiary","status":"publish","type":"post","link":"https:\/\/billlosey.com\/knowledge-center\/the-right-beneficiary\/","title":{"rendered":"The Right Beneficiary"},"content":{"rendered":"

Here\u2019s a simple financial question: who is the beneficiary of your IRA? <\/strong> How about your 401(k), life insurance policy, or annuity? You may be able to answer such a question quickly and easily. Or you may be saying, \u201cYou know \u2026 I\u2019m not totally sure.\u201d Whatever your answer, it is smart to periodically review your beneficiary designations.<\/p>\n

Your choices may need to change with the times.<\/strong> When did you open your first IRA? When did you buy your life insurance policy? Was it back in the Eighties? Are you still living in the same home and working at the same job as you did back then? Have your priorities changed a bit \u2013 perhaps more than a bit?<\/p>\n

While your beneficiary choices may seem obvious and rock-solid when you initially make them, time has a way of altering things. In a stretch of five or ten years, some major changes can occur in your life \u2013 and they may warrant changes in your beneficiary decisions.<\/p>\n

In fact, you might want to review them annually. Here\u2019s why: companies frequently change custodians when it comes to retirement plans and insurance policies. When a new custodian comes on board, a beneficiary designation can get lost in the paper shuffle. (It has happened.) If you don\u2019t have a designated beneficiary on your 401(k), the assets may go to the \u201cdefault\u201d beneficiary when you pass away, which might throw a wrench into your estate planning.<\/p>\n

How your choices affect your loved ones. <\/strong>The beneficiary of your IRA, annuity, 401(k) or life insurance policy may be your spouse, your child, maybe another loved one or maybe even an institution. Naming a beneficiary helps to keep these assets out of probate when you pass away.<\/p>\n

Beneficiary designations commonly take priority over bequests made in a will or living trust. For example, if you long ago named a son or daughter who is now estranged from you as the beneficiary of your life insurance policy, he or she is in line to receive the death benefit when you die, regardless of what your will states. Beneficiary designations allow life insurance proceeds to transfer automatically to heirs; these assets do not have go through probate.<\/p>\n

You may have even chosen the \u201csmartest financial mind\u201d in your family as your beneficiary, thinking that he or she has the knowledge to carry out your financial wishes in the event of your death. But what if this person passes away before you do? What if you change your mind about the way you want your assets distributed, and are unable to communicate your intentions in time? And what if he or she inherits tax problems as a result of receiving your assets? (See below.)<\/p>\n

How your choices affect your estate. <\/strong>Virtually any inheritance carries a tax consequence. (Of course, through careful estate planning, you can try to defer or even eliminate that consequence.)<\/p>\n

If you are simply naming your spouse as your beneficiary, the tax consequences are less thorny. Assets you inherit from your spouse aren\u2019t subject to estate tax, as long as you are a U.S. citizen.<\/p>\n

When the beneficiary isn\u2019t your spouse, things get a little more complicated for your estate, and for your beneficiary\u2019s estate. If you name, for example, your son or your sister as the beneficiary of your retirement plan assets, the amount of those assets will be included in the value of your taxable estate. (This might mean a higher estate tax bill for your heirs.) And the problem will persist: when your non-spouse beneficiary inherits those retirement plan assets, those assets become part of his or her taxable estate, and his or her heirs might face higher estate taxes. Your non-spouse heir might also have to take required income distributions from that retirement plan someday, and pay the required taxes on that income.<\/p>\n

If you designate a charity or other 501(c)(3) non-profit organization as a beneficiary, the assets involved can pass to the charity without being taxed, and your estate can qualify for a charitable deduction.<\/p>\n

Are your beneficiary designations up to date?<\/strong> Don\u2019t assume. Don\u2019t guess. Make sure your assets are set to transfer to the people or institutions you prefer. Let\u2019s check up and make sure your beneficiary choices make sense for the future. Just give me a call or send me an e-mail \u2013 I\u2019m happy to help you.<\/p>\n","protected":false},"excerpt":{"rendered":"

Here\u2019s a simple financial question: who is the beneficiary of your IRA? How about your 401(k), life insurance policy, or annuity? You may be able to answer such a question quickly and easily. Or you may be saying, \u201cYou know […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[18],"tags":[],"class_list":["post-2220","post","type-post","status-publish","format-standard","hentry","category-blog"],"_links":{"self":[{"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/posts\/2220","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/comments?post=2220"}],"version-history":[{"count":0,"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/posts\/2220\/revisions"}],"wp:attachment":[{"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/media?parent=2220"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/categories?post=2220"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/billlosey.com\/knowledge-center\/wp-json\/wp\/v2\/tags?post=2220"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}