Beneficiary Designations are Very Important

As we go about our lives we obtain bank accounts, insurance policies, annuities, investment accounts, retirement plans, IRAs and other such financial vehicles.  We have the attorney write up our Wills and Trusts.  With each we are asked who the beneficiary will be on this account?   If you’re like me for many of these items you set it and forget it. 

But as our life’s changes come to pass these beneficiary designations should be reviewed and changed as necessary.  Just a few years ago I realized my parents were still listed as my beneficiaries in both my will and on my retirement and IRA accounts.  If I’d passed at that point, it would have been a huge burden on them to manage everything.  So, I had it all corrected to more appropriate people.

If you don’t designate a beneficiary on a retirement account or an IRA account the full balance is taxable to your Estate all at once at your death. 

If you mean to spread the account amongst several people you need to list them all and the relative percentages each should receive.  If you only list one person and expect them to share, first of all, they may not.  Even if they want to share it may cause them gift tax issues.  Let’s not burden our relatives and friends. 

If you have a life change, death of relative or friend, divorce, marriage, birth of child, take these changes into consideration and make appropriate changes.  It may not be appropriate to put significant assets into the hands of minors.

As you have questions about any of the ramifications of this, please contact us.

Marion Thomson

Ian Valdivia ian@t


Thompson Tax Associates, Inc.

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