According to a study by Fidelity Investments, 52% of retirees believe leaving a legacy is important, with 74% hoping to leave an inheritance for their children and grandchildren (Fidelity, 2020). However, leaving a legacy can go beyond financial gifts. A report by Merrill Lynch found that retirees who engage in volunteer work or donate to charity often feel a greater sense of purpose and fulfillment, and are more likely to leave a positive impact on their communities (Merrill Lynch, 2017). By focusing on leaving a meaningful legacy, retirees can not only make a lasting impact on their loved ones, but also on the world around them.
Benefits of a will:
- Distributes property in accordance with your preferences
- Appoints an executor to administer your estate.
- Appoints a guardian for your minor children.
- Can create a trust.
You've worked hard with Aetna over the years to accumulate wealth, and it's likely reassuring to know that after your passing, the assets you leave behind will continue to provide for your loved ones and the causes you care about. To ensure that your legacy reaches your intended successors, you must make the necessary preparations immediately. There are four fundamental methods to leave a legacy: (1) through a will, (2) through a trust, (3) through a beneficiary designation, and (4) through joint ownership arrangements.
Wills
A will is essential to any estate plan. We advise our Aetna clients to have a will regardless of the size of their estate, even if they have implemented other estate planning strategies. There are two methods to leave property in a will: specific bequests and general bequests. A specific bequest specifies the recipient of a particular item of property ('I bequeath my niece Jen Aunt Martha's diamond brooch'). A general bequest is typically a portion of the remaining property or assets after all specific bequests have been distributed.
Principal heirs typically receive general bequests ('I leave the rest of my property to my wife, Jane'). Generally, you can leave any type of property to whomever you choose via a will, with the following exceptions:
- Even if you name a different beneficiary in your will for the same property, the property will transfer according to the beneficiary designation.
- Jointly owned property with survivor rights transfers directly to the joint owner.
- The disposition of trust property is governed by the provisions of the trust.
- Regardless of what you leave him or her in your will, your surviving spouse is entitled to a statutory share (e.g., 50%) of your estate.
- Certain jurisdictions permit inheritance rights for children.
Caution: Leaving property outright to minor children is problematic. You should name a custodian or property guardian, or use a trust.
Trusts
Using a trust to bequeath property to one's heirs is another option we'd like to highlight for our Aetna employees. According to the terms of the trust, the trust property transfers directly to the trust beneficiaries. There are two fundamental categories of trusts: living or revocable and irrevocable. Living trusts are highly adaptable because the provisions of the trust (e.g., beneficiary renaming) and the property in the trust can be modified at any time. You can even reverse your decision by reclaiming your property and terminating the trust.
In contrast, an irrevocable trust can only be modified or terminated in accordance with its terms. This can be helpful for Aetna clients who wish to minimize estate taxes or safeguard their assets from potential creditors. A trust is created by executing a document known as a trust agreement (we recommend that Aetna clients have an attorney draft any form of trust to ensure that it achieves their goals).
A trust cannot distribute property it does not own; therefore, you must also transmit property ownership to the trust. By listing the items on a trust schedule, non-documented assets (e.g., jewelry, tools, and furniture) are transferred to a trust. It is necessary to re-register or re-title property with ownership documents. You must also appoint a trustee to administer and manage the trust's assets. You can name yourself trustee of a living trust, but you must also name a successor trustee who will convey the property to your heirs after your death.
Tip: A living trust is also a good way to protect your property in case you become incapacitated.
While property that passes by will is subject
to probate, property that passes by a trust,
beneficiary designation, or joint ownership
arrangement bypasses probate.
Beneficiary Designations
Beneficiary designations transfer contractual property, such as life insurance, annuities, and retirement accounts, to successors. Typically, filling out and signing a form is sufficient. Beneficiaries can be individuals or entities, such as a charity or a trust, and multiple beneficiaries can be named to share the proceeds. You must identify both primary and contingent beneficiaries.
Caution: You shouldn't name minor children as beneficiaries. You can, however, name a guardian to receive the proceeds for the benefit of the minor child.
When designating a beneficiary, we recommend that these Aetna employees consider the income and estate tax implications for their heirs and estate. For example, the proceeds your beneficiaries receive from life insurance are generally not subject to income tax, whereas the proceeds they receive from tax-deferred retirement plans (such as traditional IRAs) are subject to income tax.
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These Aetna employees should consult a financial planner to determine if their beneficiary designations will produce the desired results. When your circumstances change (e.g., marriage, divorce, death of a beneficiary), you should reconsider your beneficiary designations. With your will or trust, you cannot alter the beneficiary. You must complete a new beneficiary designation form and approve it.
Caution: Some beneficiaries can't be changed. For example, a divorce decree may stipulate that an ex-spouse will receive the proceeds.
Tip: Certain bank accounts and investments also allow you to name someone to receive the asset at your death.
Joint Ownership Arrangements
Two (or more) people can jointly own property, and when one dies, the other becomes the sole proprietor. This form of ownership is known as joint tenancy with survivorship rights (JTWRS). Certain states refer to a JTWRS arrangement between spouses as tenancy by the totality, and a few states have a form of joint ownership known as community property.
Caution: There is another type of joint ownership called tenancy in common where there is no right of survivorship. Property held as tenancy in common will not pass to a joint owner automatically, although you can leave your interest in the property to your heirs in your will.
You might find joint ownership arrangements beneficial and convenient for certain types of property, but not for all of your property. Having a joint checking account, for instance, ensures that an heir will have immediate access to funds upon your passing. And jointly owning an out-of-state residence (such as a vacation property) can eliminate the need for an ancillary probate proceeding in that state. However, it may not be practicable to own property jointly if there are frequent transactions (e.g., your investment portfolio or business assets) because you may need the approval and signature of the other owner for each transaction.
Other disadvantages of joint ownership include: (1) your co-owner has immediate access to your property; (2) naming someone who is not your spouse as co-owner may result in gift tax consequences; and (3) if the co-owner has debt problems, creditors may attempt to seize the co-owner's share.
Caution: Unlike with most other types of property, a co-owner of your checking or savings account can withdraw the entire balance without your knowledge or consent.
Conclusion
Leaving a legacy is like planting a tree. Just as a tree grows from a small seed and eventually becomes a majestic presence, our legacy starts with small actions that accumulate over time to create a lasting impact. Just as we carefully tend to a tree by providing water and nutrients, we must nurture our relationships and contributions to society to create a legacy that is meaningful and impactful. And just as a tree provides shade and shelter for future generations, our legacy can inspire and benefit those who come after us.
How does Aetna Inc.'s frozen pension plan affect employees' eligibility for benefits, and what specific criteria must current employees meet to qualify for any benefits from the Retirement Plan for Employees of Aetna Inc.?
Eligibility for Benefits: Aetna Inc.'s pension plan has been frozen since January 1, 2011, meaning no new pension credits are accruing. Employees who were participants before this date remain eligible for benefits but cannot accrue additional pension credits. To qualify for benefits, participants need to have been vested, which generally occurs after three years of service(PensionSPD).
In what ways can employees at Aetna Inc. transition their pension benefits if they leave the company, and what implications does this have for their tax liabilities and retirement planning?
Transitioning Pension Benefits: If employees leave Aetna, they can opt for a lump-sum distribution or an annuity. Employees can roll over their lump-sum payments into an IRA or other tax-qualified plans to avoid immediate taxes. However, direct rollovers must follow the tax-qualified plan's rules. If not rolled over, employees are subject to immediate tax and potential penalties(PensionSPD).
What steps should an Aetna Inc. employee take if they become disabled and wish to continue receiving pension benefits, and how does the company's policy on disability impact their future retirement options?
Disability and Pension Benefits: Employees who become totally disabled and qualify for long-term disability can continue participating in the pension plan until their disability benefits cease or employment is terminated. No additional pension benefits accrue after December 31, 2010, but participation continues under the plan until employment formally ends(PensionSPD).
Can you explain the implications of the plan amendment rights that Aetna Inc. retains, particularly concerning any potential changes in the pension benefits and what this could mean for employee planning?
Plan Amendment Rights: Aetna reserves the right to amend or terminate the pension plan at any time. If the plan is terminated, participants will still receive benefits accrued up to the date of termination, protected by ERISA. Any future changes could impact employees' planning and retirement options(PensionSPD).
How does the IRS's annual contribution limits for pension plans in 2024 interact with the provisions of the Retirement Plan for Employees of Aetna Inc., and what considerations should employees keep in mind when planning their retirement contributions?
IRS Contribution Limits: The IRS sets annual contribution limits for pension plans, including defined benefit plans. In 2024, employees should ensure that their pension contributions and tax planning strategies align with these limits and the provisions of Aetna's pension plan(PensionSPD).
What are the options available to Aetna Inc. employees regarding pension benefit withdrawal, and how can they strategically choose between a lump-sum distribution versus an annuity option?
Withdrawal Options: Aetna employees can choose between a lump-sum distribution or various annuity options when withdrawing pension benefits. The lump-sum option allows for immediate access to funds, while annuities provide monthly payments over time, offering a more stable income stream(PensionSPD).
How does Aetna Inc. ensure compliance with ERISA regulations concerning the rights of employees in the retirement plan, and what resources are available for employees to understand their rights and claims procedures?
ERISA Compliance: Aetna complies with ERISA regulations, ensuring employees' rights are protected. Resources are available through the Plan Administrator and myHR, providing information on claims procedures, plan rights, and how to file appeals if necessary(PensionSPD).
What documentation should employees of Aetna Inc. be aware of when applying for their pension benefits, and how can they ensure that they maximize their benefits based on their years of service?
Documentation for Benefits: Employees should retain service records and review their benefit statements to ensure they receive the maximum pension benefits. They can request additional documents and assistance through myHR to verify their years of service and other relevant criteria(PensionSPD).
How do changes in interest rates throughout the years affect the annuity payments that employees at Aetna Inc. might receive upon retirement, and what strategies can they consider to optimize their retirement income?
Impact of Interest Rates on Annuities: Interest rates significantly affect annuity payments. Higher interest rates increase the monthly annuity amount. Employees should consider the timing of their retirement, especially at the end of the year, when interest rates for the following year are announced(PensionSPD).
If employees want to learn more about their pension options or have inquiries regarding the Retirement Plan for Employees of Aetna Inc., what are the best channels to contact the company, and what specific resources does Aetna provide for assistance?
Contact for Pension Inquiries: Employees can contact myHR at 1-888-MY-HR-CVS (1-888-694-7287), selecting the pension menu option for assistance. Aetna also provides detailed resources through the myHR website, helping employees understand their pension options and benefits(PensionSPD).