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Primary Beneficiary Questions

What is a primary beneficiary?

A primary beneficiary may be the individual who is entitled to get the benefits of a will, trust or insurance policy after the owner or creator’s death. Individuals may sometimes not know what their duties and rights as primary beneficiary may be. Given below are some important questions about beneficiary duties and rights.

If a primary beneficiary dies before the last surviving joint owner, would their share be split among the other surviving beneficiaries?

If one of the primary beneficiary dies before the death of the last surviving joint owner, then his/her share may not be split among the other beneficiaries. In many cases, the individual’s share can also be passed on to their surviving heirs.

Can a trust be named the primary beneficiary of an IRA?

It may be possible to name a trust as a primary beneficiary of an IRA account. However, the tax that has to be paid may not be minimized if the trust is named as the beneficiary.

Once a beneficiary inherits an IRA, how would the tax be calculated on it?

The income tax on an IRA may depend on the amount of money that the beneficiary may receive from it. If the money from the IRA is inherited immediately after the death of the owner, then the beneficiary may have to pay taxes at a regular income tax rate. However, if the individual starts another IRA to put the inherited money, they can have a period of 5 years to withdraw the money from it and may have to pay taxes at a marginal rate.

Can the beneficiary of life insurance policies denounce the death benefit proceeds?

The primary beneficiary of life insurance policies may denounce the death benefit proceeds. If the individual does so, the life insurance and its proceeds may be passed on to the contingent beneficiaries of the policy.

How can a beneficiary of a trust find out who its executor is?

The individual may have to go to the probate court of the county where the creator of the trust lived in order to find out about its executor. Since all trusts are public records, the individual can also read the will and see all the paperwork related to the trust at the probate court.

Would an ex-spouse get insurance benefits if he/she was a primary beneficiary of an insurance policy of the deceased?

An ex-spouse may continue to be the primary beneficiary of an insurance policy and get insurance benefits after the death of the policy owner unless there is a court order that prohibits the ex-spouse from getting the benefits.

Can an individual ask a trustee to step down if they are not performing their required duties properly?

If an individual is the sole beneficiary of a trust, he/she may have the right to ask a trustee to step down if he/she is not performing his/her duties properly. The individual may ask for a full accounting and audit report of the trust to be done.

If the primary beneficiary is deceased, can the secondary beneficiary of an individual’s retirement account pass on the money to the individual’s surviving children for the funeral expenses?

If the children of the deceased individual are the only surviving heirs of the estate and if the money received will be used only for the funeral expenses and any other estate expenses, then the secondary beneficiary can denounce the retirement benefits and it may be passed onto the deceased individual’s children.

If you have been named a primary beneficiary, then it is important for you to know what your rights are and what process you may need to follow in order to claim the benefits. You may get confused if you try to get information on your own as the process and duties may differ depending on whether you are a beneficiary of an estate, will, insurance policy or trust. In such situations, it may be helpful to ask an Expert if you have any questions and get as much information as possible.
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