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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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Are your beneficiary designations and your will coordinated?

We've written before about the importance of coordinating your will with other accounts that have beneficiary designations. Items such as retirement accounts and life insurance plans, for which you can designate a beneficiary, will override a will in the event that there is a discrepancy.

Insurance plans, retirement accounts and accounts that are payable on death (or POD) are known as non-probate assets, which are generally passed down to beneficiaries whom the account owner designates. By contrast, probate assets in New Jersey that don't have a beneficiary designation will pass to heirs and family members in accordance with your will or with New Jersey's intestacy laws.

There are ways, however, to give control of a POD, IRA, 401(k) or insurance policy to your estate. You could simply take out the beneficiary designation and include language in your will that addresses the account, or you could list your estate as the beneficiary.

Giving your estate beneficiary status could have negative consequences, though, in terms of tax liability. For example, if an estate is named as a beneficiary of a 401(k) or an IRA, which are tax-deferred accounts, then the estate will bear the brunt of the ensuing tax burden. And making your estate a life insurance beneficiary could open up the policy to creditors' claims.

It is also important to remember that non-probate and probate assets have to be accounted for in determining if a federal or New Jersey estate tax return should be filed. To figure out the best way to limit tax liability and preserve estate assets, New Jersey residents will probably want to speak with an attorney with experience in comprehensive estate planning.

Source: nj.com, "Biz Brain: Beneficiary designations can override will," Karin Price Mueller, Dec. 9, 2013

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