When we meet with clients concerning their estate planning, we want to focus on assets such as IRA’s, life insurance policies, annuities, 401k accounts, and 403b accounts.  We normally refer to these accounts as “non-probate assets”.   Non-probate assets normally pass at death by way of a written beneficiary form.  These forms are usually provided by the IRA custodian, 401k plan trustee, life insurance company, or administrator of the plan.  IMPORTANT – these assets do not pass under the will or through the succession unless the estate has been named as the beneficiary.   There can be negative income tax consequences by naming the estate as the beneficiary of a tax deferred account such as an IRA or 401k plan account.

When consulting with your attorney concerning estate planning, you should review your beneficiary designations on your non-probate assets to confirm they are still correct.  Questions to consider can include:

  • Has a beneficiary died?
  • Has the plan participant remarried?
  • What is the purpose of the use of the plan accounts, annuities or life insurance proceeds at death?
  • Who do you name as a contingent or successor beneficiary if the primary beneficiary dies before you?
  • Is a beneficiary a minor (in which case a trustee of a trust for the minor should likely be named as the beneficiary)?

Yes, a trust can be named as the beneficiary of non-probate assets, which is common for minors, disabled individuals, or to preserve the principal of the asset.  However, before naming a trust as the beneficiary of tax deferred accounts, the income tax issues related to naming a trust as the beneficiary should be considered as part of the equation.  We can help you review your beneficiary forms as part of your estate planning.

For more information, please contact: Carey Messina (225.382.3408) or Kevin Curry (225.382.3484).