What’s Inside:

p2 ° Do you know your beneficiaries

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p3 ° Greg’s Corner

p4 ° Thank You

It’s 2016: Do You Know who Your BenefIcIarIes are?

Securities offered through LPL Financial, mem-ber FINRA/SIPC. Investment advice offered through Private Advisor Group, a registered investment advisor. Private Advisor Group and APD Wealth Management are separate entities from LPL Financial.

Gregory M. Hanson, President

Spring 2016

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Whether you’re wealthy or earn a modest income, there is one estate planning concern that is shared by people from all walks of life - the decision of who gets what when you’re gone. While some individuals logically assume that a will is the only official forum to express such decisions, that is not always the case. Often, an equally important issue in estate planning is whom to name as beneficiary on life insurance policies and retirement plan accounts such as 401(k) and IRAs, since these assets are passed on regardless of what may be spelled out in a will.

Naming beneficiaries can be complicated And can sometimes present unintended consequences to the beneficiary. For instance, an improper designation could make life difficult for your family in the event of your untimely death by putting assets out of reach of those you had hoped to provide for, possibly even increasing their tax burdens. Further, if you have switched jobs, become a new parent, divorced, married or survived a spouse or child, your current beneficiary designations may need to be updated.

At your next review, be sure to include a beneficiary review as part of that pro-cess. Here are a few general pointers to keep in mind when naming beneficiaries, followed by some specific guidelines for insurance policies, employer-sponsored retirement plans and IRAs.

General ConsiderationsAge of beneficiary. Many policies and plans will not directly transfer assets to minors until a trustee or guardian is approved by a court.Ability of beneficiary to manage assets. Perhaps a trust set up in the person’s name would be better than a direct transfer.Naming contingent beneficiaries. Should something happen to your primary beneficiary, the contingent beneficiary would receive your assets.

Life InsuranceNo matter who is designated, the beneficiaries will receive the death benefit

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The IRS has also issued regulations that dramatically simplify the way certain distributions affect IRA owners and their ben-eficiaries. Consult your tax advisor on how these rule changes may affect your situation.

Keep Your Plan Up-to-Date

When completing overall estate plans and wills, it is impera-tive to readjust all beneficiary designations so that your estate plan accurately reflects your intentions. Remember, outdated beneficiary designations (such as ex-spouses or older parents) could misdirect the intended flow of an entire estate plan unless changed now.

Also keep in mind that beneficiaries are paid directly as named. Thus, beneficiary designations are not governed by the direc-tions of last wills and testaments.

As is always the case with estate planning, consult with quali-fied professionals concerning your particular situation in order to ensure that your beneficiary designations are in tune with your goals.

Tax Tips

s Life insurance benefits are transferred free of income taxes.s A nonspouse beneficiary of a pension plan, such as a 401(k) must report the proceeds as “income with respect to a decedent” but can transfer assets tax free to an IRA.s IRA beneficiaries must pay income taxes up to the fully deductible portion of the IRA proceeds and earnings. A spousal beneficiary may be able to treat the IRA as his or her own.

Do You Know Your BenefIcIarIes continued...

This article was prepared by Wealth Management Systems, Inc. The opinions voiced in this material is for general information only and are not intended to provide specific advice or recommendations for any individual. We suggest that you discuss your specific situation with a qualified tax or legal advisor. Please consult me if you have any questions. LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A. , an affiliate of LPL Financial.

proceeds income tax free. Unlike property disposed of in a will, if the beneficiary designation form is properly completed, insurance proceeds do not go through probate.

For many married couples, a spouse will be the most logical beneficiary. A trust may be a prudent beneficiary choice, however, if a surviving spouse would not have the ability to effectively manage a large sum of money. The trustees (often a legal entity rather than an individual) would then take charge of managing, investing and disbursing the policy proceeds for the benefit of the surviving spouse.

Be sure to name contingent or secondary beneficiaries. This means that if the primary beneficiary has died, the insurance proceeds would go to the secondary individual or trust. If there are no surviving beneficiaries, then your beneficiary is generally the “estate of the insured,” which means the death benefits end up being probated and ultimately distributed according to the instructions of the decedent’s last will and testament. If an individual dies without a valid will (intestate), then the order of legal beneficiaries to whom assets are distributed is specified by that state’s law.

Retirement Plans and IRAs

Federal law generally requires that a spouse be the primary beneficiary of a 401(k) or a profit-sharing plan account unless he/she waives that right in writing. A waiver may make sense in a second marriage - for example - if a new spouse is already financially set or if children from a first marriage are more likely to need the money.

Single people can name whomever they wish as beneficiary of a retirement account, and nonspouse beneficiaries are now eligible for a tax-free transfer to an IRA.

GreG’s corner

Happy spring! It is supposed to hit 70 degrees this week. That sure makes us happier than snow and cold!

Cal (16) started his high school baseball season last week in rain/sleet and 39 degrees. These spring games are tough for the team, but they are happy to be outside playing baseball. This will be a busy summer for him between the high school team and the VFW team, Cal will play over 40 league games plus 3 weekend tournaments between now and the end of July. He also starts weight lifting and football practice as soon as school lets out in early June.

Tyler (14) has started baseball practice, but their season doesn’t start until May and they play 20 league games plus 4-6 weekend tournaments between now and the end of July. There will be lots of baseball for Lisa and I to watch over the summer!

Lisa’s work continues to be very enjoyable for her, but she’s looking forward to having the summer off from teaching.

She always stays busy helping out with the bookkeeping and benefits here at APD, catching up on her scrapbooking and getting jobs done around the house.

All is the same with me. I play in a Wednesday night men’s golf league with a bunch of friends and we still play on a Thursday night 3 on 3 basketball league. We have not won a game this year, but it’s good exercise and we laugh a lot!

I hope all is well with you and your families. Enjoy the spring weather!

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Cal on game day

Tyler with Greg’s meat raffle win

rememBer to Keep us upDateD

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