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What should you know about naming beneficiaries?

Do you have a beneficiaries in your Last Will and Testament, Life Insurance and Retirement Accounts? Here are some important things you need to know.

Beneficiaries of a Last Will and Testament have to wait.

First, you use a Will (Last Will and Testament) to give assets to your beneficiaries, your beneficiaries don’t inherit automatically. Those beneficiaries will need to wait until the probate court process is over before they can inherit. In some cases, this can take many months or even years. If the estate is complex, the legal fees can deplete that inheritance.  If avoiding probate is a top priority, consider a Revocable Living Trust as part of your estate plan.

Go here to learn more about wills and trusts.
Go here to learn more about avoiding probate.

Your Last Will and Testament does not control your retirement plan and life insurance policy benefits. 

Second, assets in a life insurance policy or retirement plan pass to your beneficiaries directly, bypassing your Will (Last Will and Testament).  Your beneficiaries will receive these assets after completing a claim form.

Minor children should not inherit directly. Consider a trust.

Don’t name a minor child as the beneficiary of a life insurance policy or other assets. That is because minor children cannot inherit assets directly. Instead, the wise move is to create a trust to hold these assets for the benefit of a minor child. Name a trustee to oversee the management and distribution of the funds in a way that complies with your wishes.

Go here to learn more about trusts.

Be careful how you name retirement plan beneficiaries.

Unfortunately, most beneficiaries of a retirement plan take the cash immediately, which may not be your intention.  Don’t name your estate as a beneficiary.  That is because that may not allow your spouse or younger beneficiary to take advantage of an IRA rollover or some provisions that could allow your IRA to grow tax-deferred over many years.

If there are multiple beneficiaries, name them.

Finally, if there are multiple beneficiaries for an insurance policy or retirement plan. Don’t make name one person, assuming he/she will distribute to other beneficiaries.  Instead, designate a separate share for each beneficiary.  Does a beneficiary have special needs? If so, create a trust for their share so any inherited assets don’t disqualify them from important government benefits.

Call our office today at (813) 902-3189 to schedule a time for us to talk about an Estate Planning Session.
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How can we help seniors manage their finances?

How can we help seniors manage their finances? With these tips, seniors can manage their finances better. And if they ever need help, they can shift their financial management to someone they can trust. 

1. Use direct deposit.

First, use direct deposit for income form pensions, annuities, and Social Security benefits. Not only will this save a trip to the bank, it also avoids the risk of a paper check being stolen, lost, or forgotten. 

2. Consolidate retirement accounts.

Consolidating retirement accounts into fewer accounts may make it easier to evaluate and manage savings, as well as to take any minimum distributions that are required.  Also, when moving money between retirement accounts, it’s a good idea to use a trustee-to-trustee transfer rather than moving the money yourself.

3. Consolidate financial accounts.

It can be a lot easier to manage your money when you have your money in fewer accounts at one bank. But make sure to consider the FDIC insurance limits on money held at one institution before consolidating. 

4. Pay bills automatically.

For recurring bills, have the biller automatically deduct payments from a credit card or bank account each month. 

5. Arrange for third-party notifications.

Arrange to have companies that provide critical services, such as electricity, send notices to you if they miss payments and the service is to be disconnected. Also,  ask the tax office to notify you if they miss tax payments and are in danger of losing their property. 

6. Get the proper legal documents in place.

Work with an estate planning attorney to get a power of attorney for finances in place. With this document, seniors can grant someone they trust the authority to manage their financial affairs if they reach a point of mental or physical inability to manage them on their own. 

Moreover, a revocable living trust is also a way to transfer control of finances. The successor trustee can manage trust assets when the senior is no longer able to manage them. 

Learn more about a Durable Power of Attorney here.

Learn more about Estate Planning here.

7. Find out whether your bank will honor the power of attorney.

Some banks may not honor a power of attorney unless it was created using forms provided by the bank or unless they run it by their legal department. Therefore, we suggest checking with the bank ahead of time. 

8. Prepare a financial overview.

An overview of their finances ready and waiting will make the process much easier. Consider making a list ahead of time that includes:

  • Information about their financial accounts, insurance policies, sources of income, regular bills and debts. 
  • The location of all of their estate planning documents, prior tax returns, birth and marriage certificates. 
  • The names and contact information of their financial and legal advisors. 

Store the financial overview in a secure place. Also, make sure  you can also access it if necessary. 

9. Get professional help. 

Hire a tax advisor to prepare tax returns and a financial advisor to manage investments.  Also consider hiring a daily money manager to handle financial tasks, such as paying bills, reviewing statements, and dispensing cash.  

Here are five things to know about aging and financial decline.

Call us at (813) 902-3189 to schedule a consultation.