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  • Eric Walter, MBA, CFP®

Financial Planning Corner: You Have a Primary Beneficiary, Is That Enough?

The type of distribution is also an important component in controlling how assets will be distributed down family lines. This would come into play if your designated beneficiaries, who have children, were no longer living and there has been no beneficiary update. There are two distribution methods- Per Stirpes (Latin for “by the roots”) and Per Capita (Latin for “by the head”). A Per Stirpes distribution means that if your beneficiaries predecease you, their portion of assets pass in equal shares to their living children, if any. In this case, each branch of the family receives the equivalent share designated, regardless of how many children are included. A Per Capita distribution means that if your beneficiaries predecease you, those assets are distributed in equal percentages to all living children. As you can see in the examples below, this could potentially make a substantial difference in what each beneficiary ultimately receives.

While designating beneficiaries today is extremely important, it is just as important to keep up-to-date as life changes to ensure continued alignment with your wishes. We recommend reviewing annually or whenever major life events occur, such as death, divorce, birth of children or grandchildren, and new marriages. Let us know if you would like to schedule a time to discuss or make any changes to your current beneficiary designations.

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