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?

Person named by the participant in an insurance policy or pension plan to receive any benefits

provided by the plan if the participant dies.

Which BYU insurance plans require beneficiaries?

Group Term Life Occupational Accidental Death &

Dismemberment Supplemental Group Term Life 24-Hour Accidental Death & Dismemberment

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

No Beneficiary Named

Life insurance proceeds are paid to the estate of the deceased person.

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.

What is an Estate?

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.)

Special entity created by law to settle the affairs of a deceased person. Two types of estates are:

What is probate?

The court process to settle the affairs of a person who has died.

• Estates “go through” probate.

What is probate?

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.

If the decedent left a will:

What is probate?

• Selects guardian for minor children

• Appoints administrator to pay estate bills

• Determines final distribution of assets

If the decedent did not leave a will the court:

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.

Who do you want to receive your estate?

If the court makes the decision, it may not be who you would choose.

The Mean One

The Clowns

The Nuts

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.

Minor Children

What if all of your children are under age 18?

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

Adult Children

Children over the age of 18, named as alternate beneficiaries, will receive the money. It does

not go through probate.

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.

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.

Life Events

Marriage Children Divorce Death

Remember at these times to update beneficiary forms.

Actions to take:

1. Complete or update beneficiary forms in the Benefits Office or on-line.

- www.dmba.com

- Choose “Manage Your Enrollment Online”

2. Contact an attorney to establish a will or trust.

Do it NOW, before it’s too late!!!

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