Senay is home for the summer, and it's such a treat to have her around. She's tanned and toned from playing competitive pickleball. Even more exciting, the indoor pickleball facility that closed back in November is reopening under new management. It’s called The Lakewood Ranch Pickleball Club. If you’ve ever thought about giving it a try, I’d definitely encourage it. The atmosphere is very relaxed and fun, and you get some great exercise. Plus, you meet so many wonderful people—lots of them in their 60s, 70s, and even 80s.
I also built a little greenhouse to try growing vegetables this summer. If anyone has had success gardening through a hot Florida summer, I’d love to hear your tips!
We had a real scare this week. Dad broke the screen door on the lanai, and all three cats got out during the night. Two came back quickly, but the smallest one, who’s very shy, was missing. After three days, we had just about lost hope when her little head popped out of the bushes! We think she never strayed more than twenty yards from the house and was just hiding the whole time. She’s so skittish. Needless to say, Dad really dodged a bullet on that one.
A ton of confusion and bad info swirls around beneficiaries and leaving moo-lah to your heirs.
So let’s clear it up with:
Dave’s Quick and Easy (but Super Important) Guide to Understanding Beneficiary Arrangements.
If your beneficiary designations don’t match your intentions, your money could end up in the wrong hands. Let’s fix that.
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Retirement Accounts
For IRAs, 401(k)s, Roth IRAs, and similar accounts, you can name both primary and contingent beneficiaries.
Example: Joey Jenkins owns an IRA. His primary beneficiary is his wife, Joan, receiving 100%. His contingent beneficiaries are his kids—Johnny and Jackie—each getting 50%.
If Joey dies, Joan gets the account and can roll it into her own IRA with no taxes due.
If Joey and Joan die together, the kids split the account. Now they have two options.
Option #1: Cash Out
They can take the money as a lump sum. But—big warning—they’ll owe income taxes on the full amount that year. So if Johnny receives $300,000, he could easily owe $100,000 in federal taxes.
Option #2: Inherited IRA
They can roll the money into an Inherited IRA. This lets them spread out withdrawals over time. They’ll pay income tax only on what they withdraw. No 10% early withdrawal penalty applies—even if they’re under 59½. However, they must withdraw all the money within 10 years
Bonus Tip: Roth IRAs
Roth IRAs are even better. They pass to heirs tax-free, and withdrawals are also tax-free. But non-spouse heirs still have to empty the account within 10 years.
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Important Retirement Notes
You can change your beneficiaries anytime.
With a 401(k), your spouse must be the primary beneficiary—unless they sign a waiver. That rule doesn’t apply to IRAs.
And most importantly, your beneficiary designations override your will.
If your IRA lists your daughter but your will says the money should go to your son, your daughter still gets it. No contest.
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Non-Retirement Accounts
These include checking and savings accounts, brokerage accounts, and real estate—anything outside a retirement wrapper.
There are two common ways to pass these assets on: joint ownership and Transfer on Death (TOD) designations.
If you own an account jointly with someone, they automatically take over the account when you die. No probate.
With TOD, you keep control during your lifetime, but the account transfers to your chosen beneficiary at your death.
Let’s go back to Joey Jenkins. If he has a savings account and wants it to go to his daughter, he can title it: Joey Jenkins TOD Jackie Jenkins.
When he dies, the money goes straight to Jackie, skipping the courts.
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More Non-Retirement Tips
TODs and joint accounts both avoid probate. You can name more than one TOD beneficiary and split things however you'd like. Trusts can offer control and protection but may be more complex. TODs are often a simpler option.
In Florida, you can’t use TOD for real estate. But you can use a Lady Bird Deed which is a special kind of deed used in Florida and a few other states. It lets you keep full control of your property while you're alive. You can sell it, refinance it, or change your mind. But when you die, the property automatically transfers to your named beneficiaries—no probate needed.
It’s a simple, powerful tool—often a great alternative to putting your home in a trust. which works in a similar way.
Annuities held outside of retirement accounts only tax the gain when inherited—not the full value like IRAs.
Life insurance passes tax-free in most cases and avoids probate—just like retirement accounts.
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Bottom Line
This stuff really matters. It helps avoid probate, unnecessary taxes, delays, and family conflict.
I’ve seen people forget to update their beneficiaries for years—some even accidentally leave everything to an ex-spouse.
Don’t let that happen to you.
Take a few minutes to check your beneficiaries. Update them as life changes. Make sure your money ends up where you want it.
Be Blessed,
Dave
P.S. – Here’s a bonus observation from Dave: Real estate can be a real heartbreaker when it comes to inheritances. Even when the will clearly says a property should be split three ways, it often leads to major conflict. One sibling wants to rent it out, another wants to sell because they really need the money, and the third wants to move in. Things get messy fast.
The best thing you can do is make your wishes extremely clear—and even better, have an honest, grown-up conversation with your kids while you're still here. Trust me, you don't want them throwing mashed potatoes at each other over turkey dinner.