3. Name beneficiaries for your investment accounts.
No matter your age or net worth, designating a beneficiary for investment accounts can be as important as writing a will, but it is much less complex. Assets in a 401(k) plan, traditional IRA, Roth IRA, or SEP or SIMPLE IRA pass directly to the beneficiaries you've designated with your account custodian, trustee, or plan administrator. Furthermore, your beneficiary designations can supersede any accommodation you have made in your will for your retirement account (see transfer-on-death registration discussed below). Remember to name beneficiaries on all these retirement accounts.
No matter your age or net worth, designating a beneficiary for investment accounts can be as important as writing a will, but it is much less complex.
For employer-sponsored retirement plans like a 401(k), if you’re married, keep in mind that most plans automatically designate your spouse as the beneficiary unless you name another beneficiary(ies) and your spouse has consented in writing.
Designating a beneficiary, or beneficiaries, on a nonretirement account, such as a brokerage account, may establish what’s legally known as a "transfer-on-death" (TOD) registration for the account. For an individual account, this allows ownership of the account to be transferred to a designated beneficiary upon your death. Perhaps most importantly, and in many instances, a TOD registration allows an account to pass outside probate, enabling your beneficiaries to avoid the time and expense of the probate process. As with all accounts, estate taxes may still apply. Be sure to consult your tax adviser.
Marriage, divorce, birth, and death are the four big events that can affect your beneficiaries, so if you have experienced any of these in your life, remember to take a look at your beneficiary designations and see whether you need to make any changes.
No matter your age or net worth, designating a beneficiary for investment accounts can be as important as writing a will, but it is much less complex. Assets in a 401(k) plan, traditional IRA, Roth IRA, or SEP or SIMPLE IRA pass directly to the beneficiaries you've designated with your account custodian, trustee, or plan administrator. Furthermore, your beneficiary designations can supersede any accommodation you have made in your will for your retirement account (see transfer-on-death registration discussed below). Remember to name beneficiaries on all these retirement accounts.
No matter your age or net worth, designating a beneficiary for investment accounts can be as important as writing a will, but it is much less complex.
For employer-sponsored retirement plans like a 401(k), if you’re married, keep in mind that most plans automatically designate your spouse as the beneficiary unless you name another beneficiary(ies) and your spouse has consented in writing.
Designating a beneficiary, or beneficiaries, on a nonretirement account, such as a brokerage account, may establish what’s legally known as a "transfer-on-death" (TOD) registration for the account. For an individual account, this allows ownership of the account to be transferred to a designated beneficiary upon your death. Perhaps most importantly, and in many instances, a TOD registration allows an account to pass outside probate, enabling your beneficiaries to avoid the time and expense of the probate process. As with all accounts, estate taxes may still apply. Be sure to consult your tax adviser.
Marriage, divorce, birth, and death are the four big events that can affect your beneficiaries, so if you have experienced any of these in your life, remember to take a look at your beneficiary designations and see whether you need to make any changes.
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