by Bill Griffith Bill Griffith No Comments

When to Update Beneficiary Forms

A good time to review and update your beneficiary forms is near the end of the year or after a significant life event.

Beneficiary Designations

A beneficiary is typically a person named or designated to receive proceeds from a life insurance policy or benefits from a retirement plan or IRA after the account owner or insured dies.

If you are contributing to a 401 (k) or 403 (b) plan at work or other retirement plan, such as a traditional or Roth IRA, then you may remember choosing a beneficiary when you enrolled in the plan.

But over the years, many things can happen in life that might require changes to your beneficiary designations, such as a marriage, divorce, birth of children, or death.

Spouse Versus Non-Spouse Beneficiary

Typically, a married couple will name each other as the primary beneficiary of their life insurance policy and retirement plans.

After the first spouse dies, the survivor should change the beneficiary on their life insurance policy and retirement accounts as soon as possible. It’s easy to forget about this. After the funeral, everyone goes back to work and living life and sometimes these things don’t get done.

Know the Rules

Different rules apply to spouses and non-spouse beneficiaries of individual retirement accounts (IRAs). The SECURE Act and SECURE Act 2.0 changed the rules for taking distributions from IRAs. The rules impact spouses and non-spouse beneficiaries differently.

Also, there is a deadline for splitting inherited IRAs if there is more than one designated beneficiary.

There are many choices when you inherit an IRA. Making a mistake when inheriting assets could trigger a huge tax bill and cause you to lose out on an opportunity for many years of tax deferred growth.

Marriage, Death, or Divorce

Naming a beneficiary is not something that you should do once and forget about. In fact, anything that affects your future financial security and that of your family is something that you should review and update regularly.

Imagine a surviving spouse finding out that a former spouse is still named as the primary beneficiary of a decedents 401 (k) plan. The consequences could potentially ruin a survivors’ retirement plan, especially if it was a sizable account.

Unfortunately, this type of thing happens more often than it should. Don’t let it happen to you. Changing the beneficiary after divorce will ensure that a life insurance benefit from a company plan will be paid out to the person you desire.

Working with a CFP® practitioner

If you are working with a CFP® practitioner, he or she should keep copies of your beneficiary forms on file and review them with you at least once each year and/or after significant life events.

If you are not working with a CFP® practitioner, contact us today and we will take care of this for.

Better yet, find out if your overall retirement and estate plan is on solid ground and sign up with us online.

by Bill Griffith Bill Griffith No Comments

Financial Planning After a Family Member Dies

Financial planning is important all through life but even more so after a family member dies. Having someone you trust can help you through the process and relieve stress.

After the Funeral

Dealing with the death of a loved one is stressful enough but not knowing what to do with Social Security, insurance policies, wills or trusts, ongoing bills and living expenses, and transfers of accounts and funds from financial institutions to beneficiaries poses an additional burden on a family.

Did you know there is over twenty-one things to consider doing in just the first month after the funeral?

Most people know about contacting the Social Security Administration and ordering certified copies of the death certificate. But few people know what to do after they receive the certified copies.

In addition to taking care of everything for your loved one, you might also want to seek advice from a Certified Financial Planner® practitioner and consider creating or updating your own financial plan.

This is especially important if you are the spouse or other beneficiary.

Avoid Mistakes

Making a mistake when inheriting assets could trigger a huge tax bill and cause you to lose out on an opportunity for many years of tax deferred growth.

Mistakes can happen even before a loved one dies when trying to retitle real estate and other property to avoid the probate process. If done incorrectly, you could potentially miss out on significant tax benefits.

Benefits of Financial Planning

Financial planning is a 7 step collaborative process of outlining how your income, savings, investments, and other assets can work to help meet your goals.

The cost of hiring a Certified Financial Planner® practitioner may be less than you think. For example, our One-Month Starter Package is $500. This is a good way for you to get started working with a Certified Financial Planner® practitioner. We’ll talk over the phone or meet in person one or more times over the course of one month to answer your questions, discuss your situation, and propose recommendations.

For example, you may have questions like those listed below:

  • How do I transfer and title assets that I just inherited?
  • Do I have enough assets to last in retirement?
  • I’m interested in moving. Can I make this happen?
  • How can I take advantage of Roth conversions?
  • How can I save for my child’s education?
  • How should I pay down my debt?
  • Do I have enough insurance if I were to pass away?

After we’ve decided upon a course of action, we’re available to help you implement your decisions and answer follow-up questions. After the first month, you can decide if you want to continue with an ongoing financial planning relationship.

For those desiring a continuing relationship where we can help implement your plan and monitor your progress over time, our ongoing financial planning fee is $400.00 per month.

                                             Get started today.