Many people assume their will or living trust determines how all of their assets will be distributed. However, certain assets—such as retirement accounts, life insurance policies, and some investment accounts—pass directly to the beneficiaries named on those accounts, regardless of what is stated in a will.
Because these assets often represent a significant portion of a person's wealth, reviewing your beneficiary designations is an important part of your overall estate and charitable planning.
A quick review can help ensure your assets are distributed according to your wishes, avoid outdated beneficiary information, simplify administration for your loved ones, and create a meaningful future charitable gift without revising your will.
When reviewing your beneficiary designations, consider these tips:
• Review them regularly. Life changes such as marriage, divorce, births, deaths, or retirement may affect your intentions.
• Consider percentage-based gifts. Naming beneficiaries by percentage rather than a fixed dollar amount helps ensure distributions remain aligned with your goals, even as account values change over time.
• Name contingent beneficiaries. This provides a backup plan if a primary beneficiary is unable to receive the asset.
• Use accurate information. When naming a charitable organization, be sure to use its correct legal name and tax identification number to avoid confusion later.
• Don't overlook retirement accounts. Traditional IRAs can be particularly tax-efficient assets for charitable gifts because qualified charities generally receive these assets free from income tax.
• Review donor-advised fund succession plans. If you have a donor-advised fund, make sure you have named successor advisors or charitable beneficiaries so your charitable intentions continue beyond your lifetime.
Beneficiary designations are often one of the simplest ways to support the causes you care about while creating a lasting philanthropic legacy. If charitable giving is part of your estate plan, be sure your beneficiary designations reflect your current wishes.
If you'd like to discuss charitable giving options or learn more about creating a legacy through the Fremont Area Community Foundation, we'd be happy to visit with you.
