In the latest blog from the Building a Legacy series, we explained the process of estate planning and everything you needed to know to properly manage your assets the way you want. In this article, we will dive deeper into adding beneficiaries to your accounts and plans. Whether you are familiar with or already have beneficiaries in place, we hope you can learn something new in this article so you can continue to build a legacy that lasts!
What are beneficiaries?
Beneficiaries are the individuals, organizations, or entities you designate to receive assets or benefits from your estate, insurance policies, retirement accounts, savings accounts, and trusts after your passing. They are a key component of estate planning, ensuring that your assets are distributed according to your wishes. You can have as many beneficiaries as you wish ranging from family to charities.
What is "Per Stirpes"?
"Per stirpes" is a method of distributing an estate where if a beneficiary predeceases the person creating the will, that beneficiary's share is passed down to their descendants (such as children).This approach ensures that the inheritance remains within the family line of the deceased beneficiary.
For example, if you have three children and one of them passes away before you, under a "per stirpes" distribution, the deceased child's share would go to their children (your grandchildren), rather than being divided among the surviving children.
Why should I consider them?
Considering and designating beneficiaries is important for several reasons. First, it ensures that your assets go to the people or causes you care about most. It can also help avoid legal disputes among family members and streamline the distribution process, providing clarity and peace of mind for your loved ones during a challenging time. Listing beneficiaries on accounts and policies can supersede the will, ensuring that assets are transferred directly to the named individuals, bypassing probate. Additionally, proper beneficiary designations can have tax implications, potentially reducing the tax burden on your heirs.
How can I set up beneficiaries?
Setting up beneficiaries is a straightforward but important process. You can designate beneficiaries on various accounts, such as life insurance policies, retirement accounts (like 401(k)s and IRAs), savings accounts, and in your will or trust documents. If you do not currently work with a financial advisor, feel free to reach out to us by filling out our 'Become a Client' form. Please note that we can only accept 4 new clients this year, but we would always be happy to have a conversation with you to get you going in the right direction!
Your legacy starts with you!
It's important to regularly review and update these designations, especially after major life events, to ensure they still align with your intentions. Consulting with your financial advisor or estate planner can help you navigate this process and make informed decisions that align with your values and goals. Take the time to consider how you want your legacy to unfold.
Harvest Point® Wealth Management and LPL Financial do not offer legal advice or services.
The content in this material is for general information only and are not intended to provide specific advice or recommendations for any individual.
This information is not intended to be a substitute for specific, individualized tax or legal advice. Neither LPL Financial, nor its registered representatives, offer tax or legal advice. We recommend that you discuss your specific situation with a qualified tax or legal advisor.