Your
Life
Changes…
Speaking
Your Benefi ciaries May Change Too
FINANCIALLY
O
ver time, you have probably
accumulated a number of fi nancial
assets in one form or another. Many
of those assets will be left to your
heirs through benefi ciary designations, rather than
through a will or trust. There is a good chance
that you own a least one of the following assets:
1.
Jeffrey M. Orth is a
Chartered Financial
Consultant, a Certified
Advisor in Senior Living,
and an Investment Advisor
Representative, with over
20 years of experience as
a business and personal
planning, insurance,
and wealth management
specialist. Jeff is available for
group lectures and private
consultations. Visit integrated-
financialbenefits.com or call
408.842.2716.
Jeffrey M. Orth is a registered
Representative of, and
Securities and Investment
Advisory services offered
through Homor, Townsend &
Kent, Inc. (HTK).Registered
Investment Advisor Member
FINRA/SIPC,16845 Von
Karman Ave, Ste. 225 lrvine,
CA 92606 (949)754-1700.
Integrated Financial Benefits
Network is unaffiliated with
HTK. CA Insurance License
#0C49291
A7JC 1108-04
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Life insurance (personally owned or group)
Annuity (s)
Individual Retirement Accounts (IRAs)
Retirement plans
401(k) plans
One of the most common mistakes you can
make with respect to your financial plan is to
fail to update your beneficiary designations.
All too often I run across policies with ex-
spouses still listed as beneficiaries, or an adult
child who marries but still lists his parents as
beneficiaries instead of his new spouse, or a
named beneficiary who is no longer alive.
So why would this be a problem? Let me
give you a few examples.
Example 1:
Charlie has three children from a previous
marriage. In 1992, he gets married to his second
wife, Betty, and names her as benefi ciary of his
life insurance policy, 401(k), and IRA. Charlie
and Betty divorce in 2001, and with all that is
involved in that process, he forgets to update his
benefi ciary designations. When Charlie dies in
2003, Betty receives all the proceeds from his life
insurance, 401(k) and his IRA. Charlie’s three
children get nothing.
Example 2:
John purchases a life insurance policy in 2001,
when he fi rst gets out of college, to accumulate
cash on a tax deferred basis. He is single at the
time, so he names his parents as benefi ciaries.
In 2003, John marries Kathy, and they have
their fi rst child two years later. John dies in a
car accident in 2006. Since his parents are the
named benefi ciaries, they receive the proceeds
GILROY • MORGAN HILL • SAN MARTIN
from his life insurance policy tax-free. John’s
parents want to do the “right thing” and pass
the money on to Kathy. Because the benefi ciary
was never changed, Kathy needlessly pays
taxes on money that she could have received
tax-free.
Example 3:
Terry and Susan are in business together. Terry
owns and is the benefi ciary of a policy on her
mother Susan’s life. This policy is used to fund
their buy-sell agreement, which will allow
Terry to purchase the business from Susan’s
estate when she dies. Unfortunately, a few
years later, Terry and her husband divorce, and
in a nasty settlement agreement, he is awarded
half of all marital assets. As it now stands,
Susan’s ex-son-in-law now owns one-half of
the policy on her life. If she were to pass away,
there would be insuffi cient money to fund
Terry’s purchase of the company, as outlined
in the buy-sell agreement, and the ex-son-in-
law would receive a substantial amount of life
insurance money.
All of the problems illustrated in the
examples above are preventable by regularly
re-evaluating your current financial plan and
adapting to changes that take place in your
life. It is important to realize that not all
financial assets should be treated the same,
and all should be reviewed periodically to
insure they are performing as desired. It is rec-
ommended that all life and annuity contracts,
as well as 401(k), IRA and retirement plans,
be reviewed at least every two years.
If you have purchased insurance and invest-
ment products, you have demonstrated that
you care about and are planning for the future.
Although people don’t generally plan to fail,
failure to followup can cause a lot of unneces-
sary heartache for those you love. Don’t let
your careful planning go to waste because of
overlooked details. Call your financial planner
today to schedule a review of the various
elements of your current financial plan.
FALL/HOLIDAY 2019
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