May 20, 2014
Do you know who will receive your IRA, Retirement Plan, or Life Insurance proceeds when you die?
Chances are, if you have recently experienced a life event such as: birth of a child or grandchild, marriage, death, or divorce, it is time to review your beneficiary designations. An annual beneficiary designation review can ensure the desired disposition of your assets.
The last thing you want is to have your $2,000,000 IRA distributed to your ex-spouse at your death. Unfortunately, this occurs quite frequently due to beneficiary designations not being updated after a divorce.
IRA’s, life insurance proceeds, retirement plans and annuities all pass by beneficiary designation and not your will. Many people erroneously think their will or a trust will override a beneficiary designation when in fact, in most states it will not.
It is also important to review your beneficiary designations if you have made changes to your will or trusts. If you indicate in your will you want to give $1,000,000 to a charity and you want to do that through your IRA, you need to update the beneficiary designation on your IRA to reflect the charity.
In many cases, you should also have a contingent beneficiary listed. If your beneficiary precedes you in death, without a contingent beneficiary, your assets could become part of your estate and distribution of those assets may be delayed. Additionally, income tax considerations should be evaluated when naming a trust or your estate as beneficiary of your IRA.
Beneficiary designations are an important part of your overall estate plan and are often overlooked. It is important to take a few minutes annually to review your current beneficiary designations and make any necessary changes.
Please contact your Hirtle Callaghan Portfolio Manager or Investment Officer if you would like to review the beneficiary designations on file for your accounts.
Christine V. McGovern, CFA, CFP®
Christine is a Vice President at Hirtle Callaghan. Christine joined Hirtle Callaghan in 2006 with over 12 years of experience counseling corporate executives, high net worth individuals, and wealthy family groups in all areas of financial planning including: Investments, Retirement, Insurance, Tax, and Estate Planning. Most recently, Christine was a Manager in Ernst & Young’s Personal Financial Services Practice, where she was employed for six years. Prior to joining Ernst & Young, Christine spent three years at SEI Investments as an Account Director, in the Trust Advisory Services Group. Previously, she was an Analyst with Brownson, Rehmus, & Foxworth. Christine received her M.B.A. from Webster University and a B.S. from Northern Illinois University. She is a CFP, a CFA charterholder and a member of the CFA Institute.