Guest TJCuaresma Posted November 26, 2012 Share Posted November 26, 2012 Can I list my children as beneficiaries for my 457(B) plan and also include the term 'PER STIRPES" after each of their names so that if only one of them survives me, my other child's children will also be entitled their parent's portion of the benefit? I've asked our Plan Administrators and they don't know. Any guidance would be helpful. Mahalo. Link to comment Share on other sites More sharing options...
Guest GeerTom Posted November 26, 2012 Share Posted November 26, 2012 Say you have three kids, A, B and C. A dies with two kids, B dies with none and C is alive at your death. The B family is extinct, so the A family and the C family each gets half. The A family half is split in half for A's two kids, so each gets a quarter. The C family half goes to C. so C gets half. If C had died with three kids, each would have gotten one sixth. The right way to say this is "my issue, per stirpes." Tom Geer Link to comment Share on other sites More sharing options...
QDROphile Posted November 26, 2012 Share Posted November 26, 2012 Use such terminology if you don't care about the outcome. Any plan adminstrator worth its salt would not allow the term. Link to comment Share on other sites More sharing options...
ESOP Guy Posted November 26, 2012 Share Posted November 26, 2012 It will require more cost as it will require the help of a lawyer but it would seem you would get a better result if you made a trust the beneficiary and use the trust to divide the assets. Just spitballing ideas here. Link to comment Share on other sites More sharing options...
Guest TJCuaresma Posted November 26, 2012 Share Posted November 26, 2012 It will require more cost as it will require the help of a lawyer but it would seem you would get a better result if you made a trust the beneficiary and use the trust to divide the assets. Just spitballing ideas here. Being that this is a NON-ERISA plan, is this type of beneficiary designation even allowed? Mahalo for all the responses. Getting educated.... Link to comment Share on other sites More sharing options...
masteff Posted November 26, 2012 Share Posted November 26, 2012 If you google the right keywords, 457 beneficiary per stirpes, you get a dozen examples of 457 plans that do permit "per stirpes" designations. The only question is if your plan will accept it. The easiest way to resolve that is to turn in a designation using "per stirpes" and put the burden on them to accept or reject it. If they accept it, then they must abide by it. Edit: Actually, I'd rather you use a sheet paper as an attachment and spell out "x% to my son Tom Jones or in the event of his death divided equally between his children Larry Jones, Moe Jones and Curly Jones". This keeps me from having to spend time determining who the children are. Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra Link to comment Share on other sites More sharing options...
david rigby Posted November 26, 2012 Share Posted November 26, 2012 Well... that might also leave out any child born or adopted after the designation. I'm a retirement actuary. Nothing about my comments is intended or should be construed as investment, tax, legal or accounting advice. Occasionally, but not all the time, it might be reasonable to interpret my comments as actuarial or consulting advice. Link to comment Share on other sites More sharing options...
mbozek Posted November 27, 2012 Share Posted November 27, 2012 It will require more cost as it will require the help of a lawyer but it would seem you would get a better result if you made a trust the beneficiary and use the trust to divide the assets. Just spitballing ideas here. Being that this is a NON-ERISA plan, is this type of beneficiary designation even allowed? Mahalo for all the responses. Getting educated.... Why does ERISA matter? Per stirpes is a common law definition that is recognized in estate planning in every state. It appears in IRA beneficiary designations filed with custodians. No one wants to spend the money to draft a trust to divide up the plan assets because of the prohibitative cost. I dont see the problem with leaving the plan benefits to beneficaries in the following division: 50% to John Jones per stirpes and 50% to Jane Jones per stirpes. The children of a deceased beneficary can retain counsel to provide the necessary proof that they are heirs of the deceased beneficiary. mjb Link to comment Share on other sites More sharing options...
ESOP Guy Posted November 27, 2012 Share Posted November 27, 2012 In regards to the trust idea I have seen it before as part of a larger estate planning process. I suspect because of the cost one would need large amounts of assets including the plan benefits to make it worth it. But otherwise I do think it would do the job. Link to comment Share on other sites More sharing options...
masteff Posted November 27, 2012 Share Posted November 27, 2012 Well... that might also leave out any child born or adopted after the designation. In which case, the employee needs to be responsible enough to update their BDF. If they want something more complex, then a trust as suggested above is the way to go. I'm not going to undertake additional work or legal expense to administer your estate planning. I suspect because of the cost one would need large amounts of assets including the plan benefits to make it worth it. Actually, a basic trust isn't very expense. You do have some up front legal expense to draft the documents but there's little to no expense until the person dies and then the expense doesn't have to be very big if you have a family member capable of handling the basics. My father died this year and I'm co-trustee on his trust; I'll be surprised if it costs us more than 2-4 hours a year for legal and accounting. Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra Link to comment Share on other sites More sharing options...
Belgarath Posted November 27, 2012 Share Posted November 27, 2012 I'd HIGHLY recommend that you run any per stirpes designation by an attorney licensed to practice in your state. The reason I say this is because when I was doing some investigating on this some number of years ago, I was somewhat shocked to find that "per stirpes" didn't necessarily mean the same thing or produce the same result in all states! Now, this could have been changed since that time, or the original information may possibly have been faulty, but since it can end up making a big difference with substantial sums of money, it seems worthwhile to involve a competent estate planning attorney. Link to comment Share on other sites More sharing options...
mbozek Posted November 27, 2012 Share Posted November 27, 2012 I'd HIGHLY recommend that you run any per stirpes designation by an attorney licensed to practice in your state. The reason I say this is because when I was doing some investigating on this some number of years ago, I was somewhat shocked to find that "per stirpes" didn't necessarily mean the same thing or produce the same result in all states!Now, this could have been changed since that time, or the original information may possibly have been faulty, but since it can end up making a big difference with substantial sums of money, it seems worthwhile to involve a competent estate planning attorney. Why not place the burden on the executor/administrator of the estate to identify the beneficaries of a per stirpes distribution? See below instructions on a beneficiary designation form of an IRA custodian for designating a per stirpes distribution. "I understand that for a designation of “per stirpes”, it will be the responsibility of the Executor/Administrator of my estate to identify to the custodian the specific beneficiaries at the time of my death." mjb Link to comment Share on other sites More sharing options...
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