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Beneficiary Planning

As retirement age is reached, typicallymore information is needed about beneficiary planning.  The main intent is to pass along property and assets to your descendants, preserving assets, and avoiding unnecessary tax burdens.  An effective strategy to transfer your wealth to your beneficiaries includes seeking a professional to help determine your needs and guide you along the process.  

Do you have questions or concerns regarding planning for your beneficiaries?  Locate a local beneficiary planning professional.

Life insurance provides a cash benefit for the beneficiaries upon the death of the insured. It allows the beneficiaries to pay off debts and other expenses and it can serve as a source of income to replace any income lost as a result of the death of the insured. There are two primary types of life insurance, term life insurance and permanent life insurance.  Term life insurance provides insurance for a specific period of time at a lower cost and permanent life insurance provides a specified amount of coverage at variable rates. There is also universal life insurance, which builds cash value and is becoming a more popular option with life insurance companies.  Contact a financial professional today to find the best option for you.  

To properly plan for your beneficiaries, it is useful to research the following:

  • Retirement Planning
  • Life Insurance
  • Wills and Trusts
  • Tax Implications in Retirement
  • Funding College and Retirement
  • Estate Planning

When you have a living will, you there is a security in knowing that your beneficiaries will be taken care of according to your wishes.  If you don't have a will, this is called intestate and the state can determine who gets your property, assets, and children.  The basic elements of a will determine the following: your executor meaning the person who is authorized to carry out your will, who will get your property and assets, who will take custody of your minor children, and who will manage your property and assets for your minor children until they become adults. A trust is a written legal agreement by which your assets are managed by one person and transferred to others. Property and assets can be transferred to a trust, including real estate, a business, cash, stocks, and bonds. Revocable trusts can be changed at any point, but they don't offer the same asset protection as an irrevocable trust.

According to the IRS, there are several tax rules that apply once a person passes away. Their descendants have to pay an estate tax in order to receive their inheritance. A will cannot resolve issues such as the estate taxes that may be owed at the time you or your spouse pass away.  According to IRS Publication 706, Estate Tax is a tax on your right to transfer property at your death. It consists of an accounting of everything you own or have certain interests in at the date of death.  The IRS uses fair market value to determine the total amount of property in your estate.  They also include assets such as cash, securities, real estate, insurance, trusts, annuities, businesses and other assets.

There is a dual benefit when funding your beneficiary’s education if at the same time it will be reducing the estate tax.  But in some cases it increases the tax burden because under the Uniform Gifts to Minors Act, any future earnings or capital gains will be reported and may require the parents to include it in their taxes.  It is important to contact an expert in your state who can help minimize any future tax implications.

Do you need help with beneficiary planning issues? Contact a qualified local professional today for assistance with beneficiary planning.