In this episode of Protecting and Preserving Wealth, we continue our discussion on estate and legacy planning, focusing on the critical role of beneficiary designations. Beneficiary forms take precedence over wills and trusts for certain assets, including retirement accounts like IRAs, 401(k)s, 403(b)s, life insurance policies, annuities, and pensions. Bank and brokerage accounts also allow for direct beneficiary designations through Pay on Death (POD) and Transfer on Death (TOD) forms. In Arizona, real estate can even have designated beneficiaries through Arizona beneficiary deeds.

We emphasize the importance of keeping these designations up to date. Failing to update them can lead to unintended outcomes, such as an ex-spouse inheriting an account despite a revised will or trust. Some exceptions exist, like certain IRA agreements that automatically replace an ex-spouse with a current spouse, but generally, financial institutions will follow the beneficiary form as written.

We also discuss cascading beneficiary designations, where assets flow through a primary, contingent, and tertiary beneficiary structure. This setup allows for flexibility, such as a surviving spouse disclaiming an inheritance in favor of children or grandchildren, ensuring assets go where they are most needed. This approach also allows for strategic tax planning, particularly when including charitable organizations. A charitable IRA, for example, enables tax-efficient giving by directing pre-tax retirement funds to a nonprofit, avoiding income taxes on those assets.

Additionally, we cover why individuals, rather than trusts, should generally be named as beneficiaries of retirement accounts. Trusts often force distributions on a shorter timeline, increasing tax burdens. However, naming a trust as a tertiary beneficiary can serve as a backup plan to prevent probate if all primary and contingent beneficiaries pass away simultaneously. This strategy avoids delays, public scrutiny, and creditor claims against the estate.

Finally, we stress the importance of working with knowledgeable advisors to structure beneficiary designations properly. Not all custodians or advisors offer the level of detail needed to maximize financial and tax benefits. To ensure proper planning, we encourage regular reviews of beneficiary designations and consultation with qualified professionals.

For those wanting more guidance, Hosler Wealth Management can be reached at hoslerwm.com or by phone at (928) 778-7666 in Prescott and (480) 994-7342 in Scottsdale.

For more information about anything related to your finances, contact Bruce Hosler and the team at Hosler Wealth Management: Visit them online at https://www.hoslerwm.com/

Or call them in their Prescott office at (928) 778-7666 or their Scottsdale office at (480) 994-7342.

For more podcast episodes, visit our podcast website at https://hoslerwm.com/protectingwealthpodcast/

Limitation of Liability Disclosures: https://www.hoslerwm.com/disclosures/#socialmedia

Copyright © 2022-2025 Hosler Wealth Management LLC, All Rights Reserved. #ProtectingWealthPodcast #ProtectingandPreservingWealthPodcast #HoslerWealthManagement #BruceHosler

In the second installment of our estate and legacy planning series, we highlight the critical role of beneficiary designations in securing and managing wealth. Estate planning goes beyond wills and trusts; proper beneficiary designations on accounts like IRAs, 401(k)s, annuities, and life insurance determine where assets go upon death, often bypassing wills and trusts altogether.

I emphasize the nuances of Individual Retirement Accounts (IRAs), particularly their "individual" nature and the implications of beneficiary designations. Primary beneficiaries, usually spouses, receive unique advantages, such as the ability to roll over an IRA into their name and defer Required Minimum Distributions (RMDs) based on their age. Contingent beneficiaries, often children or grandchildren, are next in line, while tertiary beneficiaries—commonly overlooked—provide an additional layer of security to ensure assets avoid probate in unexpected situations.

We also discuss the potential pitfalls of outdated designations, such as an ex-spouse unintentionally remaining a beneficiary. Jason, Alex, and I stress the importance of regularly reviewing and updating these designations to reflect life changes, like marriages, divorces, or the addition of new family members. Naming individual beneficiaries is generally preferable to designating trusts, as it simplifies the transfer process and helps avoid complications that could lead to unintended tax consequences.

A key focus is the tax implications of inherited IRAs. Under the Secure Act 2.0, non-spousal beneficiaries must withdraw all funds from an inherited IRA within ten years, which may occur during their highest earning years, resulting in significant tax burdens. Converting traditional IRAs to Roth IRAs during the owner's lifetime can help mitigate this, ensuring heirs receive funds tax-free. However, beneficiaries cannot convert inherited IRAs, highlighting the importance of proactive planning.

We conclude with advice on leaving IRAs to charities as part of tertiary beneficiary planning. This strategy allows families to avoid taxes on inherited IRA funds while supporting philanthropic goals.

Regularly reviewing beneficiary designations is essential, as it allows adjustments without the need to amend trusts or incur additional costs. With thoughtful planning, beneficiary designations can ensure wealth is preserved and transferred efficiently, aligning with the owner's wishes and minimizing potential tax burdens.

Disclosure: Ed Slott's Elite IRA Advisor Group is a private IRA study group of professional financial advisors.

For more information about anything related to your finances, contact Bruce Hosler and the team at Hosler Wealth Management: Visit them online at https://www.hoslerwm.com/

Or call them in their Prescott office at (928) 778-7666 or their Scottsdale office at (480) 994-7342.

For more podcast episodes, visit our podcast website at https://hoslerwm.com/protectingwealthpodcast/

Limitation of Liability Disclosures: https://www.hoslerwm.com/disclosures/#socialmedia

Copyright © 2022-2025 Hosler Wealth Management LLC, All Rights Reserved. #ProtectingWealthPodcast #ProtectingandPreservingWealthPodcast #HoslerWealthManagement #BruceHosler

In this Protecting and Preserving Wealth episode, we’re kicking off our six-part series on estate and legacy planning. We dive into the critical steps of preparing for the Great Wealth Transfer—an estimated $84 trillion passing to the next generation by 2045. Of that, $72 trillion will go to heirs, making proper planning essential.

We talk about the importance of being ready for this transition. Will your heirs be prepared to manage your wealth? Will it be protected or lost to taxes, poor decisions, or unforeseen circumstances like inflation or bad marriages? These are tough questions but answering them now ensures your legacy is preserved.

One tool we highlight is the revocable living trust, which is especially useful in community property states like Arizona. It avoids probate, simplifies financial management, and offers significant tax advantages. For example, it can protect a surviving spouse from hefty capital gains taxes by ensuring a step-up in basis for both halves of jointly owned property. Plus, it lets a successor trustee manage your finances if you’re incapacitated.

Of course, a Trust isn’t the whole story. We also explain why a will is crucial, especially for naming guardians for minor children. Other must-have documents include Durable Financial and Healthcare Powers of Attorney to manage your affairs if you can’t manage them, a Living Will to clear your end-of-life wishes, and Arizona’s unique Mental Healthcare Power of Attorney. This last one is significant for situations involving dementia or other mental health challenges, ensuring your family can advocate for you without needing costly court intervention.

We wrap up by discussing how to title your assets correctly to avoid probate and protect them from unnecessary risks. Whether you put real estate into your trust or use Arizona beneficiary deeds, these decisions are key to preserving your estate. Mistakes like retitling retirement accounts into a trust can lead to unintended taxes, so getting professional advice is critical.

Download our Estate Legacy & Beneficiary Planning document, which is included for your benefit and to help you follow us in this six-part series.

This series is relevant to everyone over 18 and emphasizes the importance of being prepared. In our next episode, we’ll discuss beneficiary designations, but feel free to reach out with any questions in the meantime.

For more information about anything related to your finances, contact Bruce Hosler and the team at Hosler Wealth Management: Visit them online at https://www.hoslerwm.com/

Or call them in their Prescott office at (928) 778-7666 or their Scottsdale office at (480) 994-7342.

For more podcast episodes, visit our podcast website at https://hoslerwm.com/protectingwealthpodcast/

Limitation of Liability Disclosures: https://www.hoslerwm.com/disclosures/#socialmedia

Copyright © 2022-2025 Hosler Wealth Management LLC, All Rights Reserved. #ProtectingWealthPodcast #ProtectingandPreservingWealthPodcast #HoslerWealthManagement #BruceHosler