SC Educational Radio Interview

This morning I was interviewed by Mike Switzer on The South Carolina Business Review broadcast on the SC Educational Radio Network. We spoke about per stirpes designations for beneficiaries, beneficiary designation forms, the need for durable power of attorney, and transfer on death and pay on death accounts.

I have received calls looking for more information on these topics so I am posting links to the articles that have discussed those topics on this blog. Hope this makes it easier to find.

Per Stirpes
Beneficiary Designation Forms
Durable Power of Attorney
Transfer on Death, Pay on Death

Per Stirpes - Two Small Words That Make A Big Difference

Per Stirpes is a term you must learn about in order to build a successful estate plan. It is a Latin term meaning "per branch". Sometimes it is omitted from beneficiary forms, wills, and trusts with sometimes devastating consequences.

Per Stirpes is an important term because it indicates how property should be distributed in the event of a deceased beneficiary or heir.

For example let's say you have a son and daughter who each have two children of their own. You have an IRA which you wish to leave to your children in equal shares. If you have indicated this on the IRA beneficiary form you may think all is well. However, suppose your daughter is traveling with you when you both die in an automobile accident. What will happen to the assets in the IRA?

Without the per stirpes indication your son will inherit all the assets in the IRA, leaving your grandchildren from you daughter with no share. If, however, you included the per stirpes designation on the beneficiary form, your surviving son would inherit his half of the IRA, and your daughters heirs would inherit the other half of the assets. This dramatic difference is due to those two small words - per stirpes.

The lesson is to be sure to review your beneficiary forms for IRA's, insurance policies, employee retirement plans, wills, and trusts to be sure your assets transfer according to your wishes when you are no longer here to explain your intent.

Technorati Tag financial planning, estate planning, per stirpes