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Beneficiaries

Beneficiaries. Benefits Office D-240 ASB 422-4716. Agenda. Definition of beneficiaries BYU Plans requiring beneficiaries What happens if . . . No Beneficiary Spouse Minor Children Adult Children. What is a Beneficiary?.

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Beneficiaries

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  1. Beneficiaries Benefits Office D-240 ASB 422-4716

  2. Agenda • Definition of beneficiaries • BYU Plans requiring beneficiaries • What happens if . . . • No Beneficiary • Spouse • Minor Children • Adult Children

  3. What is a Beneficiary? Person named by the participant in an insurance policy or pension plan to receive any benefits provided by the plan if the participant dies.

  4. Which BYU insurance plans require beneficiaries? • Group Term Life • Occupational Accidental Death & Dismemberment • Supplemental Group Term Life • 24-Hour Accidental Death & Dismemberment

  5. Which BYU retirement savings plans require beneficiaries? • DMBA Thrift Plan • DMBA Tax Sheltered Annuity • TIAA-CREF Retirement Annuity • TIAA-CREF Supplemental Retirement Annuity • TIAA-CREF Roth IRA

  6. No Beneficiary Named Life insurance proceeds are paid to the estate of the deceased person.

  7. No Beneficiary Named • Retirement savings proceeds are paid: • ½ to the surviving spouse • ½ to the estate If there is not a surviving spouse then 100% of the proceeds are paid to the estate.

  8. What is an Estate? Special entity created by law to settle the affairs of a deceased person. Two types of estates are: • Gross Estate • All assets a person owns or controls at the time of death • Probate Estate • Property that has to be disposed of under court supervision • Does not include property that passes automatically • Life Insurances (named beneficiary) • Retirement income (named beneficiary) • Jointly-held property (bank accounts, cars, etc.)

  9. What is probate? • The court process to settle the affairs of a person who has died. • Estates “go through” probate.

  10. What is probate? If the decedent left a will: • Probate proceeds as guided by the will. • The executor named in the will distributes assets as directed by the will. • Guardian for minor children is appointed as directed by the will.

  11. What is probate? If the decedent did not leave a will the court: • Selects guardian for minor children • Appoints administrator to pay estate bills • Determines final distribution of assets

  12. What if the “unthinkable” happens? If both you and your spouse die in the same event, what will happen if you have not named beneficiaries and have not established a will? When the estate goes into probate the court will decide who is the guardian of your minor children and who will receive the money.

  13. Who do you want to receive your estate? If the court makes the decision, it may not be who you would choose. The Nuts The Clowns The Mean One

  14. Spouse as Beneficiary • Spouse is usually named as primary beneficiary: • Spouse has same payout options in the retirement plans as the employee participant. • No early withdrawal penalty. • Children or a trust as alternate beneficiaries: • An alternate party (non-spouse) has more limited payout options from retirement plans. • All funds have to be withdrawn within 5 years.

  15. Minor Children What if all of your children are under age 18?

  16. Minor Children • Typically the spouse is the primary beneficiary • Children are named as alternate beneficiaries • Your will states who you want for their guardian • Guardian is appointed by court if there is not a will • Money cannot be paid directly to a minor • Has to be paid through a guardian or conservator • Guardian may/may not be the conservator • Receive money for benefit of minor children

  17. Adult Children Children over the age of 18, named as alternate beneficiaries, will receive the money. It does not go through probate.

  18. What if you do not have a spouse? • A child over the age of 18 can be named as primary beneficiary. • A family member or other adult can be named as primary beneficiary. • They are supposed to share with the minor children. • No legal requirement that they “share”. • This person is liable for the taxes on money received from retirement accounts.

  19. Trust as Beneficiary • Trust receives money from insurance and retirement plans. • Money is paid out according to the terms of the trust. • Trust assets do not go through probate.

  20. Life Events • Marriage • Children • Divorce • Death Remember at these times to update beneficiary forms.

  21. Actions to take: • Complete or update beneficiary forms in the Benefits Office or on-line. • www.dmba.com • - Choose “Manage Your Enrollment Online” • Contact an attorney to establish a will or trust. Do it NOW, before it’s too late!!!

  22. Representations made in this presentation are for educational purposes and should not replace an individual, personal consultation with your attorney or tax advisor.

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