Contingent Beneficiary Form wording
My client has a qualified fixed annuity with a revolkable trust named as contingent beneficiary. I believe it would be better to name his 2 children as 50% each beneficiaries in order to “get the stretch.”
Is there a particular way that replacement beneficiary forms should best be worded?
Permalink Submitted by Al Fry on Tue, 2009-06-09 15:07
Who is primary?
Permalink Submitted by Olin West on Tue, 2009-06-09 15:39
He told me his wife is primary, but perhaps the trust is primary. I’ll have to check.
Thanks for replying.
Olin
Permalink Submitted by Bruce Steiner on Tue, 2009-06-09 23:27
If he wants his children to be the contingent beneficiaries outright and not in trust, he should name his children as the contingent beneficiaries.
If he wants trusts for the benefit of his children to be the contingent beneficiaries, he should name trusts for the benefit of his children as the contingent beneficiaries. The advantages of this are that it will keep the assets out of the children’s estates, and will better protect them against potential creditors (including spouses). However, there is some cost to creating and administering trusts, and the income accumulated in the trust may be subject to income tax at a higher rate than if it were payable to the children.