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Beneficiary Designations and Title to Property: Avoiding Unanticipated Consequences

Transfer on Death, Payable on Death, Probate and Nonprobate Assets, IRAs and SECURE

Recording of a 110-minute CPE webinar with Q&A

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Conducted on Wednesday, August 3, 2022

Recorded event now available

This course will emphasize the importance of beneficiary designations in estate planning to avoid unintended tax and transfer outcomes. Our panel of trust and estate tax experts will explain transferring probate and non-probate assets, the tax consequences of beneficiary designations, and how advisers can assist taxpayers with reviewing and updating these designations.

Description

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.

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Outline

  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

Benefits

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?

Faculty

Palumbo, Joann
Joann T. Palumbo
Partner
Tarter Krinsky & Drogin

Having practiced trusts and estates law with major New York City firms since 1986, Ms. Palumbo has deep experience in...  |  Read More

Romano, Antonio
Antonio P. Romano
Attorney
Comiter Singer Baseman & Braun

Mr. Romano is a skilled associate focusing primarily on probate, trust, and guardianship...  |  Read More