Beneficiary Designations and Title to Property: Avoiding Unanticipated Consequences

Beneficiary designations should be well thought out and reviewed frequently. Many individuals do not realize that beneficiary designations can supersede asset transfers outlined in a will. Assets not subject to probate are conveyed directly to the chosen beneficiary regardless of instructions in a will or other documents.

Taxpayers often set up transfer on death (TOD) and paid on death accounts (POD) to avoid probate, resulting in unintended consequences, including a lack of liquidity for the decedent's estate. These designations affect numerous accounts in addition to bank and brokerage accounts. Taxpayers must identify beneficiaries for life insurance policies, 529 plans, annuities, LTC policies, and retirement accounts.

Naming these beneficiaries often has tax effects. The SECURE Act recently eliminated the stretch IRA for most beneficiaries and replaced it with a 10-year distribution rule. Eligible beneficiaries are not subject to the new 10-year distribution requirements.

Encouraging clients to periodically review and update their beneficiary designations considering their current estate plan is a valuable service advisers can provide to help clients avoid costly errors and unintended consequences.

Listen as our panel of estate planning experts reviews the ins and outs of beneficiary designations.

1. Beneficiary Designations in General
2. Probate Assets—How do such assets pass to beneficiaries
3. Non-Probate Assets including
   1. Retirement assets
   2. Transfer on Death and Payable on death designations
   3. Title to Real Estate
4. Beneficiary considerations
   1. Minors
   2. Spouses
   3. Soon-to-be ex-spouses
   4. Ex-spouses
   5. Trusts
5. Beneficiary Designation Errors and Problems
   1. Issues at the beneficiary level including ERISA ISSUES
   2. Issues at Brokerage/Insurance company/Bank level
   3. Creation of tax problems
6. Secure Act and beneficiary designations

The panel will review these and other critical issues:

• When beneficiary designations trump heirs outlined in a will
• How SECURE distribution rules affect the tax consequences of inherited IRAs
• What are common errors when naming beneficiaries, and how can taxpayers avoid these?
• When should a trust be a named beneficiary?

Learning Objectives

After completing this course, you will be able to:

• Identify common beneficiary designation errors
• Decide when to consider a trust as a beneficiary
• Ascertain how disclaimers affect the transfer of assets
• Determine how the SECURE Act affects distributions of IRAs to beneficiaries

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of estate, gift and trust taxation including various trusts types, the unified credit, and portability.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).