Things you must know before a life-changing event happens, (death, birth, divorce).
Have you updated your beneficiary designations for your retirement assets, (IRAs, 401(k)), other qualified plans, or life insurance?
Have you updated, or do you have a named person on the beneficiary designation form on file with the account administrator, custodian, or life insurance policy?
Why is this important? Aside from making sure your money goes where you want it to go, beneficiary designations also ensure your assets can be quickly transferred to your intended heirs without waiting for probate.
Know/Read what is in the plan documents on how to designate or change a beneficiary to fully comply with the plan and dictate your true intent.
After death the plan goes by the Beneficiary Designation Form, even if your will is at odds with your designation. Regularly reviewing your designations is essential to estate planning and to making sure the beneficiaries designated are in accordance with your wishes, completed, and signed on the proper form. (Adhere to your plans’ requirements).
Know the operation of law. A will or living trust does not take precedence on how your assets are allocated over a beneficiary designation form of a Roth IRA, traditional IRA, or other tax-deferred retirement account, including life insurance policies.
Keynote: if a will or living trust document changes, also check the retirement beneficiary designations and change them accordingly to maintain consistency with your intentions.
Remember only changing the will or trust documents will not change the retirement account beneficiary designations and will have no impact on the disposition of the retirement account money after death.
Check with your state regarding married individuals and making beneficiary changes which may require the spouse’s consent before the change can be made.
Avoid probate and make sure your money is handled according to your intentions.
Also, know the implications of not having a beneficiary designation.
Your estate automatically becomes the beneficiary.
Subjects the asset to probate.
For more information, please contact one of the experienced tax professionals at Bormel, Grice & Huyett, P.A. at 301-953-3259 or 410-792-7259
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