Where Form 8854 Beneficiary 2023-2024

Hey, how's it going everyone? My name is Derek Ifasi, and I'm the owner of Fosse Financial Group. Today's topic I want to discuss with you is life insurance beneficiaries and what a life insurance beneficiary needs to be mindful of when unfortunate incidents occur. Now, what happens is an individual has life insurance coverage on themselves for a set term duration, kind of like an umbrella for a specific number of years. For example, let's say it's a thirty-year term policy with a coverage of $500,000. If the insured person were to pass away at year ten, then the designated beneficiaries at the time of signing the contract or the most recent beneficiary forms would receive the $500,000 payout. One interesting thing about life insurance is that it provides tax-free benefits. So, the $500,000 payout will be received by the beneficiaries without any taxes, unlike accounts such as IRAs or retirement accounts where taxes may apply. It's crucial to set up your life insurance beneficiaries properly, including loved ones or a specific charity. A common mistake I see is when individuals only set up one primary beneficiary without designating a contingent beneficiary. A contingent beneficiary is the person next in line to receive the payout if the primary beneficiary passes away before the insured person. For example, if a husband and wife have life insurance on each other and they designate each other as the primary beneficiaries, and unfortunately, both of them pass away, the payout would go directly to their estate. This could result in a complicated probate process. However, if they had designated their children as contingent beneficiaries, the payout would go to the children tax-free, bypassing probate. After the insured person's passing, the recipients of the life insurance proceeds have a certain amount of time to...