If you're signing up for a life insurance policy or have an account with a financial institution, there's a chance you'll name someone as a beneficiary without fully appreciating just how valuable this feature truly is. Below, we'll help you go beyond the obvious to make the tough decisions when it comes to choosing your beneficiaries and how they'll receive their assets.

Why Beneficiaries Matter

First, it's important to understand what generally happens to your possessions and property after you die.

• If you have a will, your loved ones must still go through the probate process to get what you left them. This can get expensive, and it can take months or even years if a disgruntled relative starts a fight over your assets.
• If you die intestate (without a will), your possessions become part of your estate, and it is left to the legal system to sort things out. For your heirs, this means more time wasted, more money down the tubes, and more aggravation.

There is a solution to these problems. You can name 澳洲幸运5开奖号码历史查询:designated beneficiaries on your accounts, such as your life insurance policy and your 401(k). You list who will get the money and what percentage each will receive. Then, after you die, your beneficia🧔ries present a death certificate to the financial institution and fill out a form. The check arrives in a few weeks. There's no probate, no court involvement, no expense.

Completing a Beneficiary Form: The Essentials

When completing a beneficiary form, you need to think about who will get the money in your accounts, and how they'll get it.

Ask yourself: Could your beneficiaries handle a large lump sum of ♑money? Would they invest it wisely? For instance, what would your 21-year-old do with a $100,000 life insurance benefit? Would they put it in stocks or real estate, or wou🦋ld they use it as a down payment on a luxury car?

If you are concerned your beneficiaries couldn't handle a large lump-sum payment, there are other options.

Annuities and Life Insurance

Several annuity💜 and life insurance companies now have a form that allows contract owners to designate how beneficiaries receive the death benefit. Generaꩲlly, they offer three payment options:

• Lump-sum
• 澳洲幸运5开奖号码历史查询:Period certain
• 澳洲幸运5开奖号码历史查询:Amortization over the beneficiary's 澳洲幸运5开奖号码历史查询:life expectancy

You could even split up the ꦜbenefit so that y꧑our beneficiaries get part of it as a lump sum with the balance as systematic payouts.

Individual Retirement Accounts

Your individual retirement account (IRA) might not have the same type of beneficiary payout options that annuities and life insurance do. The standard beneficiary form that you fill out when you open the account usually requires only that you name a primary and a secondary beneficiary.

Other than that, the custodial institution's policy, not your objectives, will determine how funds get paid out to your heirs. So what's possibly your largest financial asset is covered only by a one-page document that may not come close to expressing your intentions about who should inherit the retirement funds you worked so hard to acquire or how they should get them.

But there's another potential problem. Suppose, for example, you're single with three grown daughters (Miriam, Chava, and Leah). You name each one an equal beneficiary on your IRA. Unfortunately, Miriam dies. Shortly thereafter, you die, and the custodian's policy is that Chava and Leah should inherit Miriam's share.

However, that might not be what you would have wanted. You might have wanted Miriam's six children, your grandchildren, to get their mother's share.

An IRA asset will would have prevented this from happening. This type of will gives you the ability to spell out in greater detail what you want to become of your accounts.

Rights of the Beneficiaries

You can also specify the rights of beneficiaries. For instance, you could include stipulations that beneficiaries will be able to withdraw more than the 澳洲幸运5开奖号码历史查询:minimum required distributions, transfer money to another institution🦩, or receive only a set amount eac♐h month.

Most attorneys can prepare an IRA asset will for you. If you can't locate one, ask your accountant or financial advisor to recommend someone. After the document is completed, submit it to the custodian for a signature.

Some custodians will not unconditionally accept the form. Some may request a disclaimer promising not to hold them responsible. Others 💎may allow it, but only if the document does not conflict with the terms of their custodial agreement. Often, it depends on how persuasive you are and the size of your account.

Reducing the Burden for Beneficiaries

Your beneficiaries may not need the money right away. Suppose your 35-year-old child is a well-off professional🅘. If they inherit an IRA from you, the IRS will take up to 37 cents out of every dollar they inherit.

However, you could make it so that this inheritance would stretch over 10 years of your child's lifetime. This move can save them a bundle of tax dollars and maximize the ultimate amount they receive.

Formerly, they could have stretched their withdrawals over their lifetime, but changes to the law effective Jan. 1, 2020, limit most non-spouses to a 10-year window (the 10-year rule) for withdrawals from inherited retirement accounts. And if you die after your 澳洲幸运5开奖号码历史查询:required beginning date for 🎃澳洲幸运5开奖号码历史查询:required minimum distributions𓃲 (RMDs)—April 1 the year after you turn 73—your child will need to take RMDs based on their life expectancy, in addition to following the 10-year rule.

Keep an Eye on the Form

Before you sign that beneficiary form, think about not only who will get your money but how. And then each year thereafter, review the beneficiary forms you filled out for any 澳洲幸运5开奖号码历史查询:annuities, life insurance, IRAs🅺 or other retirement accounts.

If you can't find your beneficiary forms, contact your agent, financial advisor, or IRA custodian.

The Bottom Line

If you decide to specify how your beneficiaries will receive your money, there's a chance they won't be thrilled. But you'll have the peace of mind of knowing that the money you leave your loved ones will last much longer, just as you hoped it would.