Navigating a clear course toward your financial security.

Beneficiary Designations

During meetings with us last year, you may have noticed that we spent a considerable amount of time discussing the beneficiaries you have designated for your retirement plans and IRA accounts, in addition to your life insurance policies.  Even if you have already provided us with beneficiary designations, we will continue to request verification and updates to this information at subsequent meetings.  One reason for this, of course, is so that we can assist with the orderly transfer of assets to your loved ones when the time comes.  Perhaps more importantly, however, we do this to avoid potentially costly errors that may arise with improper or out-of-date beneficiary designations.

Because of the important role beneficiary designations play in the transfer of retirement plan assets (both IRAs and company retirement plans), it is imperative that all of your accounts be checked to insure that your intended heirs are clearly designated on the account records.  Beneficiary designations trump all other estate planning documents in determining who ultimately receives your retirement funds after your death.  Retirement plan assets should not be passed down through your will or trust.

You should never designate your estate as beneficiary on your IRA and company plan accounts because your heirs will lose important tax benefits.  If your retirement accounts are inherited through your estate, your beneficiaries will lose the ability to stretch distributions over their lifetimes, causing a large part of the ultimate account value to be lost unnecessarily to early taxation.

Probate court records are full of cases where the failure to check up on beneficiary designations has led to unintended consequences.  We will continue to be diligent in requesting confirmations and updates to your beneficiary designations so that your plans are carried out according to your wishes.

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