Many people assume that the beneficiaries named in their estate planning documents are the same beneficiaries that will automatically receive the assets in their estate. But not all assets are treated equally when the estate is distributed.
Insurance policies for example, as well as annuities or retirement accounts such as a 401k or an IRA, are transferred to a named beneficiary no matter what your Will says. Because of this, the beneficiary named in the policy or retirement plan will be the one to receive the proceeds, regardless of who might be named in your Will or living trust.
How do you make sure that the intended person gets the money they deserve from your insurance policy?
You should coordinate your retirement plans and life insurance policies with your estate plan. If a change is made after your estate plan is drafted, the beneficiary must be changed on a change of beneficiary form too – simply updating your Will is not enough.
You should also note that most of these forms allow you to name Primary and Secondary beneficiaries. The Primary Beneficiary is the person(s) who should receive the proceeds – Secondary Beneficiaries are treated as “backups” in case the primary beneficiaries die before you do. Please be aware that there may be different income tax results depending on whom is named.
To ensure that your life insurance policies and retirement plans are coordinated with your estate plan, consult a qualified estate planning attorney.
Securities offered through Avantax Investment ServicesSM, Member FINRA, SIPC. Investment advisory services offered through Avantax Investment ServicesSM.
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Securities offered through Avantax Investment Services SM, Member FINRA, SIPC. Investment Advisory Services offered through Avantax Advisory Services SM. Placing business through Avantax Insurance Services SM. CA# 0D57837