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Update Beneficiaries via Baby Steps

August 30, 2022

A lot is running through your mind when you leave the hospital and bring home a new baby. Whether it is your first, second, etc., or last child, making sure that your beneficiary designations are up to date is likely not a thought on the forefront. Between bottles, diapers, and baby snuggles, it can be easy to forget or delay reviewing and updating your beneficiaries. As a mom to a new baby, I can attest to how easily this important estate planning task can be sidetracked by the more pressing concerns that a newborn brings. New parent or not, let this article be a nudge for you, or share as a healthy reminder to someone you know.

Many of your account’s beneficiary designations can be adjusted during a midnight feeding through your online portal for certain institutions. Others may require specific paperwork that needs to first be requested. You may need to wait until baby’s social security number has been received to submit, but don’t let that keep you from starting. Start at the top of the list and update beneficiaries on each account with baby steps.

• Work Retirement Plans
• IRA Accounts
• HSA Accounts
• Life Insurance policies
• TOD/POD Investment and Bank accounts
• Will and designated guardians

You may run across labeling whether a person/entity/charity is a primary, contingent, or tertiary beneficiary. This is simply listing an order of who will claim to inherit your assets based on who is alive at your passing. A tier of options. Primary, as the name suggest, will be first in line. A contingent or secondary beneficiary, replaces the primary in their absence or if they choose to disinherit. A tertiary beneficiary will inherit if your primary and contingent options are not living or not willing to accept.

“Per Stirpes” is an additional option available for you to add on one or more of your designees. If you want your assets to flow down a branch of the family equally, in the event of a beneficiary dying before the account owner, consider adding per stirpes. For instance, if one of your primary beneficiaries dies before you, their share of your account will pass to their descendants. Without this additional Latin lingo, all living beneficiaries (on the same tier) will split the inheritance of predeceased beneficiary, potentially cutting out a family line.

An infant and a 15 year old are both minors. They will each need to have an adult act as a custodian on their inherited account in the unfortunate event of your death. Many broker-dealers, banks, and insurance companies allow for a custodian of a minor to be appointed on beneficiary paperwork. Who do you trust to act as a financial guardian of funds left for your child’s benefit? This can be the same or different person that you have named as actual guardian of the minor in your will. Once the child reaches the age of majority (age varies per state), they will be able to accept the account as their own.

Each institution that holds your assets will have a default if you do not fill out their beneficiary form. This could mean that your retirement account may go to your estate and your children could lose significant tax benefits. With baby steps, updating beneficiary designations can be easy to do – the challenge is often remembering to do it.

Published in the Victoria Advocate

Beth Koonce is a CFP® Professional and Lead Advisor with KMH Wealth Management, LLC.

https://kellerwealthadvisors.com/wp-content/uploads/2022/08/babysteps.png 247 500 Keller Wealth Advisors http://kellerwealthadvisors.com/wp-content/uploads/2024/04/KellerWA-300x80-1.png Keller Wealth Advisors2022-08-30 08:00:032024-04-15 11:55:51Update Beneficiaries via Baby Steps

Opportunities in a Complicated Economy

August 16, 2022

The second-quarter GDP report released July 28th raised a red flag – the economy shrank for the second consecutive quarter. However, the August 5th jobs report pegged unemployment at only 3.5%, a sign that the US economy is still strong. So what’s the deal? Are we in a recession or not? The answer is complicated. The wide range of economic indicators that define the peaks and troughs of the US business cycle have long been derived from data that lags several months back. As a result, recessions are not declared until months after one has already started. So what is one to do in today’s complicated economy?

Ultra-high net worth families can make financial gifts while stock prices are low to use up less of their federal lifetime gift tax exemption. The current lifetime exemption of $12.06 million per person is scheduled to reduce substantially at the end of 2025. We are already implementing estate planning strategies for our clients whom this will affect. If you fall into this bracket, consider gifting at market lows to move funds out of your estate in a more tax efficient manner. Moreover, you should follow up with your estate planning attorney, CPA, and CFP® professional in the next year to make sure your estate plan accounts for the reduced lifetime exemption.

Retirees, don’t panic over market volatility or check your retirement accounts daily. If your asset allocation already reflects your risk capacity, your portfolio’s reduced exposure to equity should help carry you through the market turbulence. If the market’s impact on your portfolio still keeps you up at night, talk to your advisor about reevaluating your risk tolerance (the amount of risk you are actually willing to assume). You should already have an emergency fund of 3-6 months of expenses, plus any required minimum distribution (RMD) amounts already sitting in cash. Most post-World War II recessions have lasted 6-12 months. If you don’t think you can make it 6-12 months with what you have currently available, then plan for alternatives like adjusting your lifestyle or potentially returning to work.

Retirement savers should generally continue to invest retirement contributions while markets are down, and consider using any excess cash to increase retirement plan contributions. Market downturns are a great time to consider Roth conversions; when executed at reduced prices, this can be a significant tax savings strategy over the long term for retirees and savers alike. If you are concerned about the market decline’s impact on your ability to achieve future financial goals, schedule a review of your financial plan with your advisor. Sophisticated financial planning software makes it possible to visualize how a financial plan could respond to a whole range of real world uncertainties, not limited to market downturns. Keep your resume up-to-date and have a backup plan should you lose your job. Early retirement plan withdrawals in a down market should be avoided if at all possible.

Historically, the influence of short term challenges becomes less impactful when consistently engaged in long-term financial planning. Find a CERTIFIED FINANCIAL PLANNER™ professional to help you create a financial plan by going to https://www.letsmakeaplan.org/

Published in the Victoria Advocate

Hannah Gohmert is a CFP® professional with KMH Wealth Management, LLC. She is the Chief Compliance Officer of the firm.

https://kellerwealthadvisors.com/wp-content/uploads/2022/08/opportunity.png 247 500 Keller Wealth Advisors http://kellerwealthadvisors.com/wp-content/uploads/2024/04/KellerWA-300x80-1.png Keller Wealth Advisors2022-08-16 13:27:442025-03-24 11:03:56Opportunities in a Complicated Economy

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