Naming Your Beneficiaries

One of the most important decisions you’ll make.

(and one you may need to make more than once)

In the unfortunate event that one of your children were to pass before you, would you want their inheritance to be passed on to their children (your grandchildren) or be split among your remaining children? This is done by selecting your beneficiaries to be “per stirpes” or “per capita”.

• Per Stirpes – if the named beneficiary predeceased the account owner, then his/her living children will inherit the assets in equal shares
• Per Capita – if the named beneficiary predeceased the account owner, the other named beneficiaries would split his/her share

The example below illustrates the differences.

Linda has 3 children: John, Mary, and Bob. John has two children of his own (Linda’s grandchildren). John passed away two years ago and now Linda has just passed away. If Linda used the per stirpes designation for her beneficiaries then John’s children (Jason and Jill) would receive his portion of Linda’s inheritance. If Linda used the per capita designation, then John’s children would receive nothing and Mary and Bob would each receive 50%.

***If you have not specified a designation, The Legend Group defaults to using the per capita designation.***

Please contact us so we can be sure your account beneficiaries are in line with your final wishes.

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Below are some questions that are often asked regarding beneficiaries.

Why bother naming beneficiaries?

When you name beneficiaries for your life insurance policy or retirement plan, the money goes directly to those individuals after your death. If you name no beneficiaries, the money generally goes to your estate, and a probate court distributes your assets according to a will. Probate can be costly, time-consuming, and is a public process. Plus, depending on estate size, your heirs may have to pay estate taxes, which could devour up to 40% of your estate’s assets.

Won’t my will take care of this?

Your will takes a back seat to beneficiary designations. Thus, if you name someone as the beneficiary of your account, that person gets the money no matter what your will says. In other words, don’t assume your will can “fix” any old beneficiary designations you’ve either forgotten about or no longer want in place.

Is a primary beneficiary enough?

No. Also name contingent beneficiaries, who would inherit the money if something happens to the primary beneficiary. You’d want to be sure, for example, that your surviving children receive your assets in case both you and your spouse, the primary beneficiary, pass away unexpectedly at the same time.

Is there a limit to how many beneficiaries I can name?

Often people see two lines for contingent beneficiaries on their life insurance or retirement plan forms, and assume they’re allowed to name only two. If you have three kids and two spaces, just write the three names down. Fill out a separate sheet of paper and attach it. You can have any number you want. Likewise, you may have as many primary beneficiaries as you wish.

Option

Distribution and Taxation

Control

Create a trust

Not Good

Very Good

Name children individually

Very Good

Good

Name your estate

Not Good

Good

What happens if I re-marry?

This is most definitely a time to update your beneficiaries, but people often forget. Thus, even years after remarriage, a first spouse still may be listed as a beneficiary for life insurance or a pension plan. Another mistake is overlooking children from a previous marriage. If you leave everything to your new spouse and he or she dies, everything will go through the spouse’s estate. Children from your first marriage may be left out entirely. The only way to avoid that is through proper planning and updating while you’re alive.

Once I pick the names, I’m done, right?

No. Regular review is imperative. Whenever something significant changes in your life, take some time to go through your papers. See what’s affected by this major change, whether it’s losing your job, or getting married or divorced, or whatever. To make this task easier, or even possible, you’ll need to keep copies of the documents on which you listed beneficiaries. It may be a good idea to create one master list, so you can see at a glance what you have decided to leave to whom and where any changes may be necessary.

If I fill out one Beneficiary Designation Form, will it cover all of my retirement plans with The Legend Group?

Yes, with one simple form you can update your beneficiaries on all of your accounts at The Legend Group and avoid any future headaches. This form can be faxed, mailed, or scanned and emailed back to us.

If you have any questions as to whom your current beneficiaries are, or would like to review your beneficiaries, please contact me.

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Legal services are not offered through, nor supervised by Lincoln Investment or Capital Analysts. None of the information in this document should be considered legal advice. You should consult your legal advisor for information concerning your individual situation.

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