Rosenthal Wealth Management Says Routine Annual First-Quarter Financial Reviews Often Make Horrific Beneficiary Assumptions

Larry Rosenthal, a leading financial planner in the Washington, D.C., area and president of Rosenthal Wealth Management, says that while many people routinely review their financial planning in the first quarter of every year, they often neglect to ask about or consider key beneficiary provisions that can lead to serious financial consequences during the coming months or years.

“Setting up a financial plan is a huge positive step one toward long-term financial security, and a key part of that process is getting the beneficiary component properly addressed. However, problems creep in during step two when annual first-quarter reviews only look at the obvious or bigger-ticket personal financial items, such as stocks and IRA performance, etc.,“ Rosenthal said.

“People tend not to see the extent to which their circumstances change over the years or sometimes just months. In that regard, one of the most important things to review and perhaps adjust is the way assets are set up to pass to beneficiaries,” he said.

Rosenthal cites an example in which a married couple has two children, and each of their children also has two children. Both husband and wife own an IRA. The primary beneficiary for each IRA is the surviving spouse, and the contingent beneficiaries are the couple’s two children, 50/50. Now, assume that one of the couple’s children dies, then the couple dies. What happens to their IRAs? 

Since the account owner and the primary beneficiary of each IRA are deceased, the beneficiary form states that the contingent beneficiaries are the couple’s two children, 50/50. However, since one of the children is also deceased, the question now becomes: what happens to that child’s 50 percent share? If the couple who originated the plan designated a per capita beneficiary structure, the deceased child’s 50 percent share would go to the other listed contingent beneficiary, giving that beneficiary the entire account and leaving nothing to the deceased child’s children (the couple’s grandchildren). Conversely, if they designated a per stirpes beneficiary structure, the deceased child’s 50 percent share would pass down to his/her children, while the surviving contingent beneficiary would still get his/her 50 percent share.

“These kinds of circumstances are not far-fetched. They happen all the time and needlessly can pit family members against each other during times of mourning,” Rosenthal said. 

Rosenthal said that in addition to simply addressing the beneficiary question and then reviewing it annually, there are a host of other beneficiary-related considerations that need to be addressed and/or reviewed annually in a financial plan. They include: talking to a financial planner about huge differences in fund distribution between wills, estates, life insurance annuities, etc.; making sure that key information about beneficiaries is still accurate (children rarely live ‘down the street’ from parents anymore); making sure that everyone who ‘needs to know’ about beneficiary provisions, does know;  taking appropriate legal steps to avoid probate courts; considering naming secondary beneficiaries in the event of the death of the primary beneficiary;  understanding the complications that can follow from naming a minor as a beneficiary and also, understanding the means of taking care of special needs beneficiaries that avoid very problematic financial consequences.

As a much-sought-after financial advisor, Rosenthal has appeared regularly on Fox Business News and has been quoted in The Wall Street Journal, CNNMoney, U.S. News and World Report, CNBC’s The Nightly Business Report, The Washington Post, USA Today, Money, Bloomberg, The Chicago Tribune, The Fiscal Times, Kiplinger’s Retirement Report, Consumer Report’s Money Advisor, The Washington Times, Financial Planning, Financial Advisor and others.

Rosenthal has been providing financial counseling for about three decades. He presently has offices in McLean, Manassas and Stafford, Virginia, and Baltimore, Maryland. Additionally, he has co-authored the book “Financial Success in the Year 2000 and Beyond.” His next book is expected out in mid-2019.

Rosenthal is also the host of “Making Money Sense,” a radio show that has aired every Saturday morning on D.C.’s WAVA from 9–10 a.m. since 2004 and is now nationally simulcast via satellite on SiriusXM channel 131.

Investment advisor representative and registered representative of, and securities and investment advisory services offered through Voya Financial Advisors Inc. (member SPIC). Rosenthal Wealth Management Group is not a subsidiary of, nor controlled by, Voya Financial Advisors Inc.

(Review control number: 752094_0321)

Media Contact Information:
Bob Johns

Source: Rosenthal Wealth Management


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