Federal Employee's CSRS & FERS Federal Civil Service Retirement
& Financial Planning Resources
Beneficiary Designation Menu
This is one of the most used probate avoidance methods and your property
automatically passes to the surviving spouse. Joint tenancy works well
with about anything you own including homes, cars, stocks, bonds, bank accounts
and many other things.
It is easy to set up. All you have to do in most states is to add the
statement “as Joint tenants” or “Tenants in Common.” There are differences
between states as to the proper wording. For example, some states permit simply
stating "John Smith and Mary Smith, Husband and wife." It is important that your
property deeds are registered with your state's official "joint tenancy"
statement. Check your deed to see how it is registered. If you want your
property to be registered in joint tenancy and you are not sure if your property
recorded properly check with an attorney or local title company.
There are many benefits of joint tenancy however there are also a number of
precautions that you need to be aware of including various limitations, gift tax
considerations for non-spouses, and other areas.
"Plan Your Estate" provides detailed guidance and explains the differences
between common law and community property states. It also explains the benefits
of "Tenancy by the Entirety" that you may wish to consider. This method of
registration protects jointly owned property form creditors if one owner goes
into bankruptcy. You will also find
The Executors Guide
helpful. It is an excellent reference for your executors or anyone who had to settle an estate.
“Pay-on-Death” Designations are used frequently on bank accounts, stocks and
bonds. It is an easy and convenient way to avoid probate. In most cases all you
have to do is fill out a form to change the name on the bank accounts to read
"John Smith Payable on Death to John Smith Jr. and Sara Smith." In this case he
left equal amounts of what is remaining in his account to each child at his
death. If one of his children dies before he does all will go to the child that
survives. Unfortunately you can't name alternate beneficiaries. If you want to
name alternate beneficiaries you should consider a simple living trust.
If you have minor children that you wish to leave money to you will have to
name an adult "custodian" for the property, under the Uniform Transfers to
Minors Act in most states. Some states don't permit leaving unequal shares
and there are many other considerations as discussed in
Plan Your Estate
Chapter 11. Refer to this book for complete guidance. It
discusses all aspects and considerations when choosing POD for your accounts.
Under the "Uniform Transfer-on-Death Securities Registration Act Another
consideration with POD/TOD designations is the limitation in many states of
designating only one beneficiary for stocks and bonds. If you refer back to the
Asset Allocation Chart you will notice
that this couple made up trusts for individually owned stocks. They did this
because the stock transfer companies only permitted designation of one POD/TOD
beneficiary and they have two children that they wanted to leave the stocks to.
Therefore, they had to form a trust to do this. They discovered that there were
many other advantages of a living trust as well that they were able to take
This is one of he basic tools that you have available to avoid probate and it
is the easiest of all to use. You are already using this method with insurance
policies and you can expand that to your retirement and other accounts.
Federal employees need to verify their beneficiary designations for their
THRIFT Savings Plan (TSP) and Federal Employees Group Life Insurance (FEGLI).
Your Thrift Savings Plan (TSP) statement lists in the upper right hand corner
whether or not you have a Beneficiary Designation on file. If it says "NO" you
need to request a TSP-3 form to list your beneficiaries. This forms permits you
to select a single, multiple, or contingent beneficiaries. You can download this
form from http://tsp;gov.
If you are not sure if you designated beneficiaries for your FEGLI coverage
contact your personnel office and have them check your Official Personnel File
(OPF), contact OPM if you are retired. If you designated beneficiaries you will
have a SF-2823 form on file that stated your elections. If one is not on file,
or if it is outdated, request a SF-2823 form to select beneficiaries. Keep a
copy for your records. You can update this form at any time and your personnel
office should send you a signed copy for your records. Keep this with your
"Survivor's File". If you are already retired OPM is your personnel office
and you can send it to them for processing. Email them at
email@example.com for additional information.
Visit OPM's FEGLI site at
http://opm.gov/insure/life/index.asp for the latest downloadable insurance
guide and for related information.
Actually, anyone you leave anything to is called a beneficiary and "Plan Your
Estate" describes all of the differences that you need to be aware of. For
example, you need to know the difference between a primary, alternate, life
estate, final and residuary beneficiary and their use and limitations. This book
describes them in detail under Chapter Five.
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