So, who is your designated beneficiary? And so
it's a good question, for people that are married generally the spouse and then the contingent
beneficiaries are the adult children, when we're talking about retired people
here. Um but it's a good question to ponder, who is your beneficiary? And I want you thinking
about that. Stephen Covey and his seven habits for highly effective people, he you know he points
out one of those seven habits is successful people begin with the end in mind and I always think
about that when I'm selling life insurance to people because instead of going over the policy
and the amount and the premiums and the cash value and all that kind of stuff let's go to the end and
say who's the beneficiary of this policy, how much money are they going to need, or how much money
are you going to want them to have tax-free money um right after you pass away. And we're going
to start there come up with an amount and then we're going to work backwards to the insurance
policy, just something to think about. So what I want to talk about is today is the advantages of
having a designated beneficiary of money passing directly to the beneficiary right after your
death. So I want to bring Tom on and we want to talk a little bit about this subject
and we'll talk about avoiding probate so when you see that up there avoiding probate
what does that bring out for you, Tom? Yeah, I mean I think one of the things that we do when
we're working with clients is we have a desire to have as many of their assets and and wealth pass
outside of probate. And what probate is is where you go to the courts and they go through your
will and they determine who gets what, which is is a good I'm glad we have that process I'm glad
it's in place to to kind of instruct you know your wishes but it's it's a cumbersome process. I mean
you have to go to the courts you have to generally you're using a lawyer, the lawyer hopefully is
good to deal with but it's just time consuming, it takes a while, there's a lot of paperwork
involved, a lot of complication and keeping track of stuff. Whereas with beneficiary designations
we get to pass things outside of probate. Yeah, I mean it's wonderful the payment goes
directly and quickly to the beneficiary. And this is the first money people see after
their parent passes away. Is is that everything's locked up they can't get anything but the
IRA goes by beneficiary and if there's Ira money or 401K money, if there's life insurance
money, if there's annuities, annuities have a beneficiary all of that that's going to happen
very quickly. If the thing has been in place for um a period of time like two years the
policy itself um there there isn't much of any investigation that has to go on to the
legitimacy of the claim. We just need to get a death certificate in and verify that this is
the beneficiary, out comes the money and that that's a a wonderful thing when you can compare
it to it avoids executors, it avoids attorneys, it avoids accountants, it avoids appraisers,
the court, and all of this is happening during the 6 months, 12 months, longer than
that sometimes following a person's death. And people when somebody passes away the survivors
need money for some things. I mean some of them is it's a spouse or in a case with younger
children I mean they need money just to live. But even if that isn't the case where people
pass away somebody's got to take care of all this stuff, deal with all these people, get the will
probated, get the house sold or get it distributed to the kids, all the stuff that's in there and
all of that takes money you got to still make the payments on the house and the taxes and the pay
the last hospital bill and all of this beneficiary payments of life insurance or annuities or
of IRA money. It creates a state liquidity, the funds are available quickly, they go to the
person that's still living and then they can pay some of the immediate bills out of there. Now I
want to bring up Tom and I want to bring up the show notes because what I'm going to encourage all
of you today that are watching this video is to check your beneficiaries, I mean we'll do it for
you or kind of lead you to do it if you come into us for financial planning but I'd like to bring
up Tom and just show you in the show notes where we've put a change of beneficiary form up there.
Yeah and so we have these show notes in the link below the video they're also they're also on our
website. Um one quick point before we get into the show notes, you know about the probate
process you know that you know the the best case scenario is sort of what we described there
you know there's a lot of people without a will, we have videos about that, if you die without
a will now we're really talking about a lot of hassle whereas the beneficiaries even if you don't
have a will get passed to them directly um and again bringing up to hans’ point that liquidity is
important just to have the money come in kind of right when you need it. But in the show notes here
we have a copy of a beneficiary change form so every company whether it's an IRA or 401K, a life
insurance annuity, all of them have a form similar to this that goes through and allows you to change
the beneficiary or update the beneficiaries. And this is important you know, we have people that
come in with ex-spouses listed as beneficiaries, we have people with deceased spouses or deceased
children or all sorts of things. We could tell you stories all day long of where this is you know
their wishes are not accurately reflected on what the current beneficiary is and so this form is
how you change that. And so you go through you know at some level you're going to put the
account number or whatever it is it identify whose account this is, your name, it has just
basic information but you're going to go through and you're going to list who you want to be the
primary beneficiary you can have multiple primary beneficiaries it could be split kind of any way
you want and then there's a section for contingent beneficiaries and contingent beneficiaries are
those people who would receive the money if the primary beneficiary had already passed away. So
we see this oftentimes we have a couple you name each other as primary beneficiary and then you're
your kids are named as contingent beneficiaries. Well yeah, and so let's talk a little bit about
per stirpes or per capita and so most of these forms default to the per stirpes, where
they require you to elect it or unelect it. I mean it just so this by and large most
beneficiaries that are in place are per stirpes. Um although there's times I see them where
somebody checked per capita before and maybe not even know what they were doing. But the
difference between these two is if I just gave an example uh like in my own family where where
my father had the beneficiary of five of us kids for life insurance and then my sister passed
away before my father did and my father passed away and the five children were named as
the beneficiary if it was marked per stirpes it would be divided five ways and her part would
have been divided amongst her children, okay? Now if it was marked per capita it's only the living
beneficiaries so then the money would have been split four ways, her kids would have gotten
nothing so that's the simplest way to describe it. And this applies in wills as well so you just
think about that, that generally speaking most people want to pick the per stirpes but you when
you're checking your beneficiaries on existing stuff, we're going to make sure you elected what
you what it is truly that you want. And we just find this all the time where we just find like
Tom said decease people, people that divorces people, I mean just all kinds of things
where there's it's necessary to redo the thing get some primaries, there primary or primary
beneficiaries, get some contingents put in there. Um and we have situations where you know
where people come to us after they've died if the person died and they find out that the
ex-spouse got the money, I got lots of examples like that. So this is this is really comes with
a lot of responsibility because the beneficiary is going to trump the will the beneficiary
designation it's going to be all passed out directly to the beneficiary before the whole will
gets probated so a lot of people think they get out of change in these things because they updated
their will. Not so, you need to keep all your beneficiaries current and you need to check them
regularly, so I want to bring Tom back on. Yeah, I'm going to make one other point here too, is
that you know oftentimes you'll have a couple one the the account owner will be living, their
spouse passes away and they have the children listed as contingent beneficiaries. That will
work fine but it is easier and would be we would recommend to update the beneficiary designation
at that point and name the kids as the primary beneficiaries because if you don't and if the
money will eventually get to them but now they have to go prove to the company that who was a
primary beneficiary has been deceased so just an extra layer another step. So you know if that if
you're in that situation and you have the kids, your spouse has passed away or whoever the primary
beneficiary has passed away and you have them listed as contingent you think you're fine, you
you are okay but it's going to make their lives easier if you go ahead and just update that form
at that point as well and name them as primary beneficiaries. Yeah so, you know the seven worries
which is our whole concept in financial planning we've talked today about IRA, 401K, every one of
those has a beneficiary on it and don't make the mistake of just leaving it to the estate that's
not necessarily a good move and then obviously we're talking about estate planning so we've
really only covered two of the seven today. I'm Hans Scheil and I'm Tom Griffith and we
thank you very much for listening, thank you.
