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Wealth Management Team

December 18 , 2015

Investment Basics: Beneficiary and Asset Designations

You have a will to make sure your estate’s assets will be distributed according to your wishes. Without a will, a court may decide how your assets will be distributed and it may not be the way you intended.

But not all assets pass through your will. Certain types of assets pass to the person you designate to receive them when you die. Beneficiary designation assets are “non-probate” assets and, therefore, are generally not governed by your will.

Check the Beneficiary

It’s important to review your beneficiary designations periodically or whenever a major life event, such as divorce, remarriage, or the death of a loved one, occurs. Make sure your beneficiary designations are up to date on your:

  • Retirement plan account. When you joined your employer’s 401(k) or other retirement plan, you named someone to receive the account balance at your death. If you’re married, you may be required to name your surviving spouse unless your spouse signed a waiver agreeing that you could name someone else.
  • Life insurance. You generally fill out a form designating a beneficiary to receive the policy’s proceeds upon your death whether you own the policy yourself or are covered under a group policy offered by your employer.
  • Individual retirement account (IRA). You can name your spouse or someone other than your spouse as beneficiary of a traditional or Roth IRA.

Other Assets To Consider

Beneficiary designations also may play a role in passing along less commonly held assets. You may be able to designate a beneficiary if you’re entitled to any of the following benefits.

  • Stock options. Your employer’s plan may allow you to designate a beneficiary to exercise your options within a certain time after your death.
  • Employee stock purchase plan. You may be able to designate a beneficiary for any company stock you bought through automatic payroll deductions.
  • Deferred compensation plan.If you’re a highly compensated employee and participate in a “nonqualified”retirement plan, you generally can designate a beneficiary to receive these benefits upon your death.

To further discuss your estate planning options or speak to an experienced professional, contact our team today.

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