You might not be around to direct where your money and things go after you die, but you probably care who will get it. The best way to make sure that your money will go where you want it to go is to set up a will and designate beneficiaries for your accounts. Beneficiaries are the people to whom your money and possessions will go after you die. Here are some things to remember.
Update, update, update. When you have a major life event, you should also think about whether or not you need to update your beneficiaries. If you get married, divorced, remarried, divorced again, have another kid or a grandkid, change your job, or open a new banking or retirement account you need to remember to update your beneficiaries when you can. You don’t want your first wife to get all of your money if your fourth wife is really the love of your life.
Name contingent beneficiaries. If your primary beneficiary dies or is incapacitated, having a backup, or contingent, selection will ensure that your assets are probably distributed. In some cases, a primary beneficiary may choose to disclaim, or waive, the right to their inheritance. In that case, having contingent beneficiaries means that there will be someone to step up to take care of everything.
Keep records. Keep your beneficiary designations in a safe place, and keep copies on file with your financial institution, attorney, or advisors.
Plan in advance. Sometimes there are things that might impact your heirs that you should consider. For example, for wealthier people, estate tax might play a role, sticking your heirs with big tax bills at the end of the year. In 2016 the estate tax exclusion is $5.45 million and the top estate tax rate is 40%. If you have less than that you don’t have to worry about the estate tax, but another is that if you designate a disabled beneficiary, giving them money might interfere with government benefits that they receive.
This is something we can help you out with, please contact Tardy & Co., PC for more information.