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How do I distribute Assets Not Typically Covered By a Will?

It’s important that you complete a beneficiary designation form to address how these assets will be distributed on a case-by-case basis. These assets can then be distributed to your beneficiaries in the event of your unexpected death.

Life Insurance

Life insurance is a contract between you and a life insurance company. In very simple terms, you promise to make premium payments to the life insurance company. In exchange, the company promises to pay a specific dollar amount to your beneficiary (or beneficiaries) upon your death.

 

Annuity

 

An annuity is a contract under which you invest a specific amount with an insurance company (or other investment company), in exchange the company agrees to invest the payments and make periodic return payments to the individual, or otherwise known as “the annuitant.”

 

What are some types of annuity?

 

Sometimes the annuity agreement is that return payments will begin on a certain date and will end at the annuitant’s death. In other cases, the payments will continue after death to a beneficiary designated by the annuitant.

 

Retirement Plans

 

Generally, the employer agrees as part of the employment arrangements to make periodic payments to a retirement plan that has been established by the employer. The payments to your account are then invested. You may designate beneficiaries for your pension plan or other retirement accounts.

 

Do I have to pay taxes on the payments or earnings?

 

You do not pay taxes on the payments to your account, or the earnings on your account, until you start to receive distributions upon your retirement.

 

What happens when I withdraw my funds?

 

In most cases, these funds cannot be withdrawn without penalty until you reach a certain age. As of 2015, it is 59 ½ years old.

 

Are there any taxes after I withdraw my funds?

 

When you do withdraw the funds, you will have to pay income taxes on the amount withdrawn.

 

Individual Retirement Accounts (IRAs)

 

An Individual Retirement Account (IRA) is an investment account into which you can transfer money. Individuals who do not have employer-sponsored retirement benefits often use IRAs.

 

Where do I set up an IRA?

 

IRA accounts can be set up with banks, brokerage firms, and other investment-related companies.

 

Will my IRA be taxed?

 

In some cases, payments are deductible for income tax purposes. These accumulated payments and the income earned by the IRA account are not taxed for income tax purposes until the individual begins receiving distributions upon retirement

 

Joint tenants (with rights of survivorship)

 

Regardless of the provisions of the deceased owner's last will, when one joint owner dies, the surviving joint tenant automatically owns the deceased owner’s interest.