Tips For Beneficiary Designations

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In the post Designated Beneficiary – Why It Is Important, I explained the necessity of designating a beneficiary. In this post, I will describe in more detail the matters needing attention when beneficiary designations.

It should be noted that everyone has different ideas, and the laws of each state are different also, so you need to consult a professional in your state for more accurate advice.


The first thing you need to consider is taxation. This is one of the most important factors. Any choice you make may have tax consequences.

Many people directly designate their trust funds as beneficiaries, but the problem is, whoever is the beneficiary of the trust fund must pay taxes on retirement income. Therefore, wealth preservation needs to be considered. If most of the money is eaten by taxes, your spouse or children will not get a large sum of money. So please discuss with your legal adviser to find the best alternative, the best way to avoid tax reasonably and legally, in order to minimize your tax liability.

Age of beneficiary

Also, if you want to name your children as your beneficiaries, they should be over 18 years old. If your child is underage, he/she cannot directly control the retirement account. You need to set up a custodian, or allow someone to act as the legal guardian of the child to control the account.


In addition, some state laws stipulate that your spouse will automatically be entitled to half of your retirement account. Check with your local tax lawyer to determine if this is true.

Check legal documents regularly

Sure, you should also develop the habit of reviewing all legal documents every year. Too many people make retirement plans very early, but then never check them again, forgetting them completely. As time and circumstances change, your plans may change.

For example, some people set up a trust fund for their children when their children are underage. The trust may already have a trustee. But when the children have reached adulthood, a custodian will no longer be needed. Your plan needs to change, and it is important to keep up with these types of decisions.

Beneficiary types

In addition to family members, you can also choose to leave some or all of your retirement accounts to your favorite charity. It all depends on you.


Above all, figure out who the beneficiaries of your retirement account should be and make sure it is set up in the right way. In addition, setting your asset heirs, not just your retirement account, is a very important thing. Be sure to take some time to talk to a qualified professional and do a good job in beneficiary designations. Then your heir will be hopeful and end up with everything.

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