Beneficial Beneficiary Benefits … Say That Three Times Fast!

Every year about this time, my CPA friends and associates stock up on midnight oil and drop out of sight. This is their busy season, after all. You can help them manage things by not giving them all your tax stuff at the last minute. This will also help you help yourself, too.

By not waiting until the last minute, you’ll give yourself time for some important things (other than filing your taxes) that should to be looked after this time of year. As you’re going through your various accounts to gather info for your accountant, take just a little extra time to review the beneficiaries on each of those accounts.

It is not uncommon for people to list beneficiaries when they first open accounts but then to never look at them again. Unfortunately that often ends up costing their heirs and estates – sometimes dearly. Ex-spouses inherit large sums of money every day, and high court rulings have upheld beneficiary designation forms, even if they were incredibly out of date or even if the ex-spouse waived their interest to the account in a divorce decree!

Beneficiary designation forms even trump Wills, too. Whoever is designated as the beneficiary on the account or plan form gets the money automatically, no matter what your Will says. And people often make the mistake of listing minor children as beneficiaries which leads to legal complications, court involvement, and loss of control.

With all that in mind, here are some things you can do this tax season to ensure the people you WANT to be your beneficiaries are your ACTUAL beneficiaries:

• Review, and if necessary, update transfer on death (TOD) or payable on death (POD) forms for all your bank and brokerage accounts.
• Review, and if necessary, update beneficiary forms for your retirement accounts (IRAs, 401(k)s, Roth IRAs, etc.), pension plans, life insurance policies and annuities.
• Review, and if necessary, update beneficiary forms for any 529 college accounts you have established.
• Make sure you do NOT have minor children listed as the beneficiaries of any of these accounts. If you do, call us to get that rectified.
• You do have a Living Trust, right? Good. Ensure your Trust is the beneficiary of each of these accounts (be sure to talk with the lawyer who set up your Trust or call us for a review when it comes to retirement accounts, as these can be tricky and it may be preferable to make your spouse the primary beneficiary of the retirement account or set up a special retirement account Trust).

If you don’t already have a Trust – or have one which hasn’t been reviewed or updated in several years – make 2015 the year to get that taken care of. Simply call us to schedule a Family Estate Planning Session so we can help you identify the best strategies to provide for and protect the financial security of your loved ones.

To you family’s health, wealth, and happiness,