Reviewing Beneficiaries – What Issues Should I Consider When Reviewing My Beneficiaries?

2026 · WHAT ISSUES SHOULD I CONSIDER
WHEN REVIEWING MY BENEFICIARIES?
Do you need to review your beneficiaries to ensure they are up to date?If so, consider whether your beneficiary designations accurately reflect your overall estate wishes, and be cognizant of different factors that may affect your heirs’ outcomes (e.g., illiquidity, lack of marketability, taxable vs. non-taxable accounts, differing investments, etc.).Are your named beneficiaries different from what your will or trust dictates should happen?If so, consider whether your account will transfer in the way you desire. Remember that beneficiaries take precedence over a trust or will.If you are charitably inclined, do you need to review the investments you intend to leave to charity?If so, consider assets that are better suited for charitable giving, such as assets that do not receive a step-up in basis (e.g., non-qualified annuities) and/or assets that are taxed as ordinary income (e.g., pre-tax qualified accounts).Do you need to review the planned proportions of qualified and non-qualified accounts being left to your heirs?If so, consider the tax implications of non-qualified accounts (which generally receive a step-up in basis) and qualified accounts (which are fully taxed as ordinary income, with the exception of Roth accounts) on your heirs. Be cognizant of how you divide these assets, as some heirs may be left with unequal after-tax amounts. Do you have your “estate” listed as the beneficiary?If so, remember that assets left to your estate will be subject to probate. Consider updating your beneficiary if this does not accurately reflect your wishes. (continue on next column)BENEFICIARY ISSUESYESNODo any of your accounts have a trust listed as the beneficiary?If so, consider reviewing the trust provisions to ensure the trust is still up to date and relevant to your situation/wishes. If the account is an annuity, consider any potential challenges and limitations (e.g., potential loss of preferential tax treatment, potential forced liquidation over the 5-Year Rule, etc.) that may affect your situation.Do any of your accounts or assets have a minor listed as the beneficiary?If so, be mindful that many assets (e.g., life insurance proceeds, IRAs, etc.) cannot be directly inherited by minors and may require probate proceedings and an appointed conservator until the child reaches the age of majority. Consider certain strategies that may help complement your overall estate planning goals for your minor beneficiaries (e.g., trusts, UTMA/UGMA, etc.). Are you concerned about your heirs being subject to unfavorable RMD rules from an inherited IRA?If so, consider strategies that may mitigate the impact of RMDs on your heirs.Are you concerned about an estate tax liability?If so, consider ways you might remove assets from your estate (or freeze them). Review your existing beneficiaries, and determine whether you can mitigate any potential estate tax issues. BENEFICIARY ISSUES (CONTINUED)YESNO
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 Dejan Ilijevski, MBA, MS

SCM Investment Services | Lake Elmo, MN | (612) 324-0629

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