Welcome to Legacy
Winter 2005

Inside This Issue

It All Started at Pearl Harbor

Will Making: Easy as 1-2-3

Erasing a "Tax Curse"

Review Your Beneficiary Designations

Mission Statement

The American Red Cross, a humanitarian organization led by volunteers and guided by its Congressional Charter and the Fundamental principles of the International Red Cross Movement, will provide relief to victims of disaster and help prevent, prepare for and respond to emergencies.

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Review Your Beneficiary Designations

Take time to review all the arrangements that have a death beneficiary designation - life insurance, annuities, IRAs or other retirement savings and brokerage and financial accounts. In some cases, your tax and legal advisers may need to be consulted.

Are all beneficiaries still living? Have you named contingent beneficiaries, in case someone dies before you? Remember that the Red Cross can be an ideal contingent beneficiary for life insurance and, especially, retirement accounts. Why? Because no income taxes or estate taxes are ever owed on amounts the charity receives. Other ideas to consider:

Make sure that your beneficiary designations do not conflict with your will or living trust. Because life insurance and retirement accounts pass outside probate, the beneficiary designations will supersede provisions in the will or trust. Federal law governs certain retirement plan distributions for married individuals.

Many retirees try to keep distributions as low as possible in order to maximize tax-free growth of their savings. Minimum distributions are based on the retiree's life expectancy. A more favorable distribution schedule is available where the account owner's spouse is more than ten years younger. Naming younger family members as the designated beneficiaries of the retirement account allows distributions to be spread out over many decades. At the owner's death, beneficiaries may take withdrawals over their life expectancies. If a charity such as the American Red Cross is named a desig-nated beneficiary, our share can be distributed outright, preserving the ability for family beneficiaries to spread payments over their life expectancies.

It might make sense to have a son or daughter, rather than a spouse, as the survivor income beneficiary, if the spouse won't need the funds. Such a move might maximize the benefit of each spouse's estate tax credit.

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© Copyright 2005 The American National Red Cross. All Rights Reserved.

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