JKParticipantStatus: PhysicianPosts: 134Joined: 01/09/2016
Currently a resident and trying to get my financial house in order. One of the major things this week is making sure beneficiaries and contingent beneficiaries are in place for all of my accounts. My spouse is the primary beneficiary (and vice versa) and the contingent beneficiary is currently her sister for my wife and my father for me (both are very trustworthy). However, I was just speaking to a friend and they said that the best option for contingent beneficiary is The Estate of “Me” instead of an actual person. My questions:
-Is this even an option/acceptable for Vanguard, Ally, Fidelity, etc…
-Is it the right thing to do, even if able?
-How does this factor in or compare to what you have in your will? How is it reconciled?March 10, 2018 at 6:01 am MST #108909jfoxcpacfpModeratorStatus: Financial Advisor, Accountant, Small Business OwnerPosts: 7307Joined: 01/09/2016
No, the contingent beneficiary should not be the estate. I’m not going into all of the reasons except to say it complicates the distribution of the retirement accounts. You should (almost) always name an individual.
Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~ 270-247-0555
https://fox-cpas.com/for-doctors-only/Dr. MomParticipantStatus: PhysicianPosts: 574Joined: 02/27/2017
Contingent beneficiary designation depends greatly on other estate planning. As Johanna mentioned, estate should not be the default contingent beneficiary designation on retirement accounts. Our contingent for retirement plans is fancy legal wording written for us by our estate planning attorney which names the trusts set up in our will.StarTrekDocParticipantStatus: PhysicianPosts: 1716Joined: 01/15/2017
Retirement funds have spouse. The taxable accounts all flow to trust.
check with your lawyer on the setup of your trustMarch 10, 2018 at 7:22 am MST #108922ransomParticipantStatus: PhysicianPosts: 13Joined: 04/05/2018
OP, you need to have an estate attorney advise. This is one area where it pays to have good advice.April 5, 2018 at 8:01 pm MST #115395MPMDParticipantStatus: PhysicianPosts: 2097Joined: 05/01/2017
You don’t really need an estate attorney when you have no assets.
Just make primary spouse and secondary someone you trust. Soon you’ll need to think about a trust even when you have a large term policy but for now don’t worry about it.April 5, 2018 at 8:33 pm MST #115401spiritriderParticipantStatus: Small Business OwnerPosts: 1702Joined: 02/01/2016
I don’t know where this idea of trust involving a contingent beneficiary is coming from. You want your executor and/or trustee to be trustworthy, but a contingent beneficiary is just that and trust is irrelevant.
With all other things being equal you generally want the beneficiary of your retirement accounts to be your spouse and another natural person as a contingent beneficiary. Alternatively, you might want a trust properly constructed to be a beneficiary of a retirement account.
You should never name your estate as any level beneficiary of a retirement account. If you do so you lose the ability for the retirement account to be distributed over someone’s lifetime. For the same general reason it is more advisable to name the younger of your potential beneficiaries as beneficiary of your retirement accounts. Their lifetimes are longer.
If available it would be better for the OP to name their father as contingent beneficiary of taxable accounts, life insurance, real property, etc… and someone younger for the retirement accounts either directly or in trust.April 5, 2018 at 9:32 pm MST #115406