In case you didn’t know, unless you bury your money in your coffin with you, you are leaving it behind! BUT you still get to control from the grave where it goes. Let’s review some basics of the afterlife of your money. Consult an investment professional though for more elaborate and specific information because it can get complicated and these are simple explanations.
1. Most investments have forms where you can list the beneficiaries for the money in the account, sometimes called a Transfer-on-Death (TOD). Set up beneficiaries on all of your investments. What you say on those forms is what happens, regardless of what your Will says. It avoids probate and simplifies the inheritance process.
2. Beneficiaries are specified as either Primary or Contingent. If you die, the investment is then inherited, proportionally, by the Primary beneficiaries or by the Contingent beneficiaries if the Primary are deceased. “Per Stirpes” can also be stated if you want the money to follow the beneficiary bloodline in case the stated beneficiary is already deceased when you die.
3. If you have an IRA, the beneficiaries can inherit their part as an Inherited IRA. This means that they are required to take some money out of it each year to satisfy the IRS but otherwise they get to keep it protected from taxes.
4. There is a lot to say about Trusts, too much to say here. Simply stated: the Trust owns the assets and you are the Trustee until you pass away and then whoever you specified in the Trust becomes the new Trustee. The assets owned by the Trust are divided up according to how it is specified in the Trust. You are gone but the new Trustee still must follow the rules of your Trust.
Action: Clean up your accounts NOW. Make sure they reflect your final wishes.
By Cammie Humke, Investment Adviser at The Humke Group, Inc
Located at 555 S. Randall Rd in St. Charles, IL, phone 630-584-7343
The Humke Group, Inc is an independent firm offering securities through Summit Brokerage Services, Inc., Member FINRA/SIPC. Advisory Services offered through Summit Financial Group Inc., a Registered Investment Adviser. Opinions expressed are that of the author and are not endorsed by the named broker/dealer. All information herein has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. For a comprehensive review of your personal situation, always consult your legal advisor. Neither Summit Financial Group nor its representatives may give legal advice.