End-of-life planning is no picnic, but the process is an important way to help minimize confusion and avoid potential conflict after the death of a loved one.

As retirees plan, it’s vital to spend some time considering beneficiary arrangements. Whether they work through an IRA, life insurance, wills or trusts, it’s important for retirees to have a good understanding of how they’re passing on their assets.

Many assets can be left to others in various ways. First, they may be jointly owned. In this case, the surviving party takes possession of the assets or ownership of the house with right of survivorship.

Second, assets owned by a trust continue to be owned by the trust and a successor trustee is appointed, and/or assets may eventually pass to named beneficiaries.

Third, assets can pass contractually through instructions left with a financial institution, for example, life insurance policies. Be sure to keep an up-to-date list of all your beneficiaries on all financial accounts.

Otherwise, assets pass down through the stipulations in the deceased’s will, which can get messy, as assets not specifically addressed can go through probate. Real property is either jointly owned or planned for in the will; there is no beneficiary option because there is no custodian of the house or physical item like most people have with financial instruments.

Typically, if a retiree has a spouse, that partner is the primary beneficiary. However, if a person’s partner dies first or at the same time, it’s helpful to have secondary beneficiaries or contingent beneficiaries listed. Often this will be a retiree’s children, with assets divided evenly. However, if a child also passes before or with the retiree, the arrangements may have unwittingly disinherited grandchildren through that child. One solution is to put in place a per stirpes distribution, meaning that a beneficiary’s share passes to their descendants, if each branch of the family is to receive an equal share. If a retiree has that intention, then they can avoid delays, misunderstanding and potential turmoil to their heirs by making this clear.

A financial advisor can be helpful with assisting clients through the complexities of estate and legacy planning. For a competent, skilled advisor, fiduciary and certified financial planner are two preferred qualifications. The main objective is to assure that the retiree’s assets get to their intended recipients with minimal delay and minimal, if any, federal and/or state inheritance or estate taxes.

Financial advisors are not attorneys, and they do not offer specific legal advice. However, they do help their clients reach this objective by coordinating investment and tax components of an estate plan with the advice and service that attorneys provide.

Len Hayduchok is the director and owner of Dedicated Financial Services. As a fiduciary and certified financial planner, he offers his wealth of experience to guide others through the mire of financial and retirement planning. Investment advisory services are offered through SGL Financial LLC.
Originally published in the Cape Gazette: https://www.capegazette.com/article/how-retirees-navigate-beneficiary-arrangements/256616