How to Create a Beneficiary Plan in 5 Simple Steps

When you pass away, you want to make sure your assets are given to those you love and care about. That’s why designating beneficiaries is one of the most important parts of estate planning. Without proper beneficiary designation, your assets could be lost to taxes, probate court, or unintended recipients.

Here’s how to create a comprehensive beneficiary plan in five simple steps:

1. Consult with a financial professional at American Investment Planners. Estate planning has many legal complexities. Our financial professionals are already familiar with these intricacies and can recommend the best course of action for your situation.

2. Review your assets. Next, work with your financial advisor to compile a list of your assets. Don’t forget to include real estate properties, savings accounts, IRAs, employer-sponsored retirement accounts, stocks, and bonds.

3. Designate your primary beneficiaries. For each of your assets, designate a primary beneficiary. This is the first person you wish to receive the asset in the event of your death. You can name multiple people, charities, or organizations as your primary beneficiary, you just need to specify which percentage goes to each party.

4. Designate a contingent beneficiary. If your primary beneficiary predeceases you, there could be legal complications. Unless you name a contingent beneficiary, who will receive your assets in the event of an untimely death to your primary beneficiary.

5. Inform your beneficiaries of your decisions. Once you have named your beneficiaries, let them know. This will not only help them feel better prepared for when the time comes, but it also increases the likelihood they will actually receive what they are entitled to.

Need help creating an estate plan? The financial professionals at American Investment Planners, LLC are here to help. We will sit down with you, listen to your needs, and work together to develop an estate plan that best suits your situation. To schedule an appointment with one of our advisors, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

Designating Beneficiaries: Do’s & Don’ts

A key component of any estate plan is designating your beneficiaries. While this seems like a relatively straightforward process, one simple mistake could lead to legal and financial troubles down the road.

Keep in mind these do’s and don’ts from American Investment Planners, LLC as you begin your beneficiary designation process…

DO Name Primary and Contingent Beneficiaries

Your primary beneficiary is the person who receives the proceeds in the event of your death. However, if your primary beneficiary predeceases you, it is good to have a backup, or contingent beneficiary in place in order to avoid legal complications.

DON’T Name Your Estate As Your IRA Beneficiary

Doing this causes nonprobate assets to become subject to probate, and eliminates any flexibility your heir may have. For example, being named a direct beneficiary on an IRA account allows the recipient to stretch out distributions and incur less tax. Inheriting the IRA from an estate, on the other hand, comes with a different set of rules, which are much less tax-friendly.

DO Review Beneficiaries Annually

It’s important to review your beneficiaries after major life events such as birth, death, marriage, or divorce. Failure to take this step could result in a transfer of assets to unintended recipients, such as an ex-spouse, or the heirs of your deceased beneficiary.

DON’T Forget to Coordinate With Your Will

Your life insurance policy is just a small portion of your overall estate plan. It is important to understand how these pieces work independently of each other, and together as a whole. For instance, your beneficiary designation trumps what’s in your will, so you want to ensure the proceeds are going to your intended recipient.

DO Consult With a Financial Advisor

Estate planning is a legally complex process with many implications and consequences. A qualified financial advisor should be able to direct you to the most tax-efficient uses of your assets, and help you avoid making critical mistakes along the way.

American Investment Planners, LLC offers professional financial advice and estate planning services to individuals across the country. To schedule a face-to-face appointment with one of our consultants, please call (516) 932-5130 or email info@americaninvestmentplanners.com.

American Investment Planners does not provide tax or legal advice. Consult with a qualified legal or tax professional regarding your particular situation.

Your Guide to Choosing Beneficiaries

American Investment Planners LLC

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(516) 932-5130 / (866) 932-5130

Most people are concerned with who is handling their money and their assets now, and although you may not want to think about it, it's equally as important to figure out who will take control upon your passing. This is where beneficiaries come in - by definition, a beneficiary is:

the person named in a life insurance policy, annuity, will, trust, or other agreement to receive a financial benefit upon the death of the owner, and it can be an individual, company, organization and so on.

If you recently started a new job and are in the process of setting up a 401(k), for example, you may have seen something about choosing a beneficiary for your account. And although you may already have someone in mind, there are a few things to consider before making an official decision about who you'll name as your beneficiary. Here are two quick things to remember:

1. Look for rules and restrictions. First, you should find out if there are any rules or restrictions for who you can name as your beneficiary - for example, if you are married but do not want to use your spouse, is there something you have to do in order to name someone else? 
2. Choose a primary and a contingent beneficiary. It isn't enough to just name a primary beneficiary - you should also have a contingent beneficiary as well. To help you better understand the two, a primary beneficiary is the person that you decide will receive all of your assets upon your passing. However, if that person passes before you, your death benefit will then be given to your contingent beneficiary.

Now it comes down to who you will actually choose. Should you choose a parent? A spouse? A child? Another relative? A friend? Here are some general guidelines that you can follow:

• If you are married, consider your spouse - this is the route many married couples take.
• If you have a child, you may want to consider including them as one of your beneficiaries, especially if your children are older and you are not married anymore. Keep in mind though that minor children cannot be chosen as beneficiaries, so if you want your minor child to receive a financial benefit, you'll want to look into a trust.
• If you are not married, select from a close friend, a sibling, a partner or even a charity - there are not usually many restrictions for who you can name under these circumstances.

Seeing as how choosing a beneficiary is an extremely important task and one that should not be taken lightly, we at American Investment Planners LLC want to help you so that you can rest assured knowing that you've made the right decision. If you need to choose a beneficiary for a certain policy or plan and/or have adult children who need to do the same, give us a call at (516) 932-5130 or email us at info@americaninvestmentplanners.com to set up an appointment with one of our advisors.