The Tremendous Importance of Proper Beneficiary Designations in Your Estate Plan

March 17, 2020

By Stephen R. Elville, J.D., LL.M. — Principal and Lead Attorney of Elville and Associates, P.C.

Beneficiary designations can make or break an estate plan. Without proper and accurate beneficiary designations, retirement plan assets can flow in unintended ways causing many potential problems including, but not limited to, the following: loss of lifetime stretch out of required minimum distributions for new class of eligible designated beneficiaries under the SECURE Act; for married persons, inefficient use of the new 10-year rule under the SECURE Act due to the “spousal rollover trap”; loss of designated beneficiary status or eligible designated beneficiary status; triggering of the five-year default rule whereby all plan assets must be withdrawn and taxed within five (5) years – this means that for all practical purposes the entire IRA or qualified plan is taxed immediately; failure of the plan assets to reach and fund important spendthrift trusts for spouses, children, grandchildren, nieces and nephews; failure of your retirement plan assets to reach intended charitable beneficiaries tax-free; and more. Risking failure of your estate plan and/or the acceleration of income tax on your retirement plan assets is just not worth it. Check your retirement plan beneficiary designations today, in consultation with your financial advisor, estate planning attorney, and CPA. Hopefully you will find no surprises. And if you do, you’ll be glad you performed a check up.

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Stephen R. Elville is the principal and lead attorney of Elville & Associates, P.C., a leading estate planning, elder law, and special needs planning law firm in Maryland. Elville and Associates engages clients in a multi-step educational process to ensure that estate, elder law, and special needs planning works from inception, throughout lifetime, and at death. Clients are encouraged to take advantage of the Planning Team Concept for leading-edge, customized planning. The education of clients and their families through counseling and superior legal-technical knowledge is the practical mission of Elville and Associates. If you would like to set an appointment with Mr. Elville to discuss estate or elder law planning issues, you may contact him at 443-393-7696, or via email at steve@elvilleassociates.com. #elvilleeducation