Beneficiary designations on retirement accounts, life insurance and transfer-on-death accounts pass assets directly to the people named, overriding what your will says. Outdated or missing beneficiaries are one of the most common and costly estate planning mistakes. Review them after every major life event, ideally with an estate planning financial advisor in Chattanooga who coordinates them with your estate documents.
For many families, retirement accounts and life insurance make up most of their wealth. Those assets pass by contract, not by will, so the form on file decides who receives them.
Most non-spouse beneficiaries must empty an inherited IRA within ten years, and some must also take annual distributions during that period. Spouses have more options. These rules affect who should receive which accounts.
Tennessee repealed its inheritance tax for deaths in 2016 and later, and it has no state estate tax. Federal estate tax applies only to very large estates. For most families the bigger issue is getting the right assets to the right people efficiently.
List every account and policy, confirm primary and contingent beneficiaries, check that they align with your will or trust, and re-check after marriage, divorce, birth, death or a move.
The primary beneficiary receives the asset first. The contingent beneficiary receives it if the primary has died or disclaims. Without a contingent, the asset may default to your estate, which adds time and cost.
If a child dies before you, per stirpes typically passes that child's share to their children. Per capita typically divides among surviving beneficiaries only. Choose deliberately, because the default on many forms may not match your wishes.
We collect every beneficiary form, compare them with your will and trust, and flag gaps for you and your attorney. It is one of the most valuable hours of planning a family can spend.
No. Beneficiary designations control the accounts they cover, regardless of what the will says.
Sometimes, especially for minors or special situations, but the trust must be drafted to handle retirement accounts properly.
No. Tennessee's inheritance tax was repealed for deaths occurring in 2016 and later.
Not sure your forms are current? Ask our estate planning financial advisor in Chattanooga to review them with you.
This article is for educational purposes only and is not individualized investment, tax or legal advice. Talk with a qualified professional about your specific situation.
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