Awhile back I posted about adding beneficiaries to your bank accounts as part of your overall estate plan. This allows the money in those accounts to go directly to the person(s) you’ve selected, without having to go through the probate process.
The Tax Guy (Bill Bischoff) over at Smart Money wrote an article entitled: “Designating Beneficiaries: What You Need to Know” for your retirement accounts. If you are designating multiple beneficiaries, it suggests two ways that you should go about it:
1) Name multiple beneficiaries for each retirement account; or
2) Set up accounts for each beneficiary.
The article suggests that you elect method #2 if you have multiple beneficiaries who you think will not be able to agree on what to do with the account. The only downside I see in this is the difficulty in managing several financial accounts with each it’s own beneficiary, but it does eliminate the squabbling among differently-minded beneficiaries to a single account.
The article also suggests you can designate each beneficiary to have a certain percentage (if you have multiple beneficiaries for a single account). Check with your financial institution if you can do it; some will not let you designate a certain percentage to each beneficiary, only allowing an equal percentage to the beneficiaries you’ve named.
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