Updating your beneficiaries and trusts: Advice from Finance Expert Steve Sexton
The Entertainer’s very own financial expert, Steve Sexton, hosts a radio show each week called “Winning In Life.” Steve is the President of Sexton Advisory Group and he is also well known for his involvement in many local charities. Through his show, he provides listeners with critical financial planning advice and he also welcomes guest speakers offering advice on life topics such as health, charity, travel, and more. Tune in every Sunday morning at 9:00 on KCBQ 1170 AM for the airing of the show.
This week, Steve confronts a very significant topic in financial planning which is the issue of taxes on annuities and IRAs. Most people are under the impression that when you get an annuity, it defers taxes and you can use it as income down the road without paying taxes on it. However, people don’t consider what happens when they pass away.
Elizabeth is a client of Steve’s who he uses as an example for this topic. When Elizabeth’s parents passed away, she was supposed to inherit a three million dollar estate. She thought it was tax free because it was covered by a trust. What she didn’t know, which Steve explains, is that annuities have interest income build up. Elizabeth ended up with a $513,000 Form 1099 and was billed by her CPA for over $300,000 in taxes. She was upset at her CPA but failed to realize that her CPA is not a financial advisor and was only doing his job.
According to Steve, 75% of the time when a spouse passes, all of the money and taxes go to the beneficiaries; therefore, it’s vital to have a beneficiary check list. People don’t think they need this because they already have a trust. “Things change, life changes, people pass away, people have kids.” says Steve. Keep your beneficiaries updated!
Steve puts things into perspective for the listeners: If you started working at a job when you were with your first wife, but now you are married to your second wife, you have to remember to change your beneficiary because if anything were to happen, the first wife would still get everything! There are so many legal disputes every year surrounding this issue, which is why Steve advises having your trust done by a good attorney.
If you want to hear more information about this topic and about how Steve personally avoided all of these issues with taxes on annuities and IRAs, listen to the entire show here: www.winninginliferadio.com.
If you have any additional questions, submit them here at Winning In Life Radio and Steve may answer them live on the show.