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McCurrie McCurrie
& McCurrie, L.L.C.

680 Kearny Avenue
Kearny, NJ 07032-3010
Phone: (201) 467-4180
Fax: (201) 997-9567
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Naming beneficiaries on life insurance and retirement plans vital

New Jersey residents who are concerned about estate planning should know that designating a beneficiary for retirement plans, IRA accounts and life insurance can be just as important as having a will.

Naming a spouse or other beneficiary to receive the proceeds of a life insurance policy enables them to receive the funds directly, outside of the probate process. These funds are tax free to the beneficiary unless the premiums on the policy were paid for through a tax deduction from an employee's paycheck. In the alternative to a spouse, a trust may be designated as the recipient of the funds, in order to manage the funds for the benefit of a spouse or children.

It is important to name additional beneficiaries to receive insurance proceeds in case the first named beneficiary, such as a spouse, also dies. In the absence of secondary beneficiaries, the insurance funds will be distributed either under the deceased person's will or according to the dictates of state law if no will exists. In such cases, the funds are subject to the probate process.

Funds in retirement plans ordinarily must, under federal law, be given to a surviving spouse as beneficiary, unless the spouse intentionally gives up that right. Some spouses may do this if they are economically independent, are in a second marriage, or when children from a first marriage require the use of the funds. Unmarried persons have no restrictions on who they can name as the beneficiary on funds in their retirement plans.

Beneficiary designations should be occasionally reviewed to see that they are up to date. Designating minor children from a former marriage as beneficiaries will often put the funds in the control of an ex-spouse, so the use of a trust may be considered.

Source: Zanesville Times Recorder, "Beneficiary planning essential when considering life insurance policies," Scott Webb, Aug. 21, 2011

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