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What is the best way to plan for your assets to remain within your bloodlines?

A 60-second read by Nicholas Scheibner:  When planning your estate, it is important to divide all of your accounts into two groups:  accounts with designated beneficiaries and accounts with no designated beneficiaries.  Examples of accounts with designated beneficiaries are 401(k)s, IRAs, transfer of death (TOD) accounts, and other retirement accounts. The designated beneficiary on an account bypasses your will.  For example, if your will states that all of your money is to pass on to your child, but your 401(k) primary beneficiary is an ex-spouse, your ex-spouse will inherit the money from your 401(k).  It is crucial that you review your beneficiaries on your accounts to make sure they agree with your desires.


For accounts with no designated beneficiary, your will directs where the assets will go.  This will include checking, savings and brokerage accounts.

In order to keep the money in your bloodline, there are some strategies you can use.  You should first have a conversation with your child to make sure that when the assets pass they remain the sole title owner of the account.  This is simple for retirement assets, but if you pass on cash from a savings account, and they add it to their joint-checking account with their spouse, it could be difficult to determine who owns the money if they were to separate (especially in a community-property state).

You could also consider setting up a trust for your child.  A trust gives you the most control of the money after you pass. Although the trust would require an initial set-up fee, and may be subject to higher income taxation, you could specify that this trust is for your child’s benefit only.  However, they would need to work with the trustee of the trust in order to access the funds.  If you are considering a trust, you will need to consult a qualified attorney.

Ultimately, the best way to plan for your assets to remain within bloodlines, is to work with your estate attorney to make sure your estate reflects your wishes.

Please contact your Baron Team if you have any questions.

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