Thursday, October 29, 2009

Step 5 to Getting Yourself in Order: Synchronize your beneficiary designations with your estate plan or dispositive document.

We are up Step 5 of Getting Yourself In Order. Step 5 is to synchronize your beneficiary designations with your estate planning.

For the earlier four steps, just read our prior articles which appear below.

Why do you want to check your beneficiary designations and synchronize them with your plan? Because if you don't, then some big surprises could await your family.

Beneficiary designations exist in many places. Life insurance; disability insurance; IRA's; 401(k)accounts; pension benefits and others. Many of those forms were completed years ago and what you put down then may not match what you want now!

Another issue is that life insurance beneficiary designations will not necessarily be what you use for qualified plan accounts like IRA's and 401(k) accounts. Those type of accounts have special rules dealing with income taxation and frequently you will want to maintain the income tax deferral on those accounts. Those rules require that special consideration be given to those accounts.

Here's another example: Let's say you took out a life insurance policy when you graduated from college. Back then you thought it a good idea to list your mother as the beneficiary. Now you are married or in a committed relationship. Your Will provides for your estate to pass to your spouse or partner. However, that life insurance is going to your Mom if you don't synchronize the beneficiary designation with your plan.

So Step 5 of getting yourself in order is to check and then synchronize your beneficiary designations with your estate planning. If you don't know how to do this, let us know and we can point you in the right direction.

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