Custom beneficiary designations

Edward Jones accepts custom-drafted beneficiary designations for a variety of retirement plans. Supported vehicles include traditional, Roth, SEP and SIMPLE IRAs, as well as owner-only 401(k) plans. Custom beneficiary designations can specify beneficiary types including individuals, entities, trusts and separate share trusts. They can also include formula, dollar or pecuniary designations.

As part of our commitment to partnering with professionals to assist mutual clients, we want to help ensure proper implementation of client plans for their assets. We can help you save time and avoid pitfalls by making sure you and your clients understand the requirements early in the process.

If you would like the Edward Jones Estates Hotline to review a draft of a custom designation before it’s signed by a client to determine whether Edward Jones will accept it, please fax a copy of the draft document and your request for review to (877) 818-0584. For urgent matters, you may call the Edward Jones Estates Hotline directly at (888) 441-5475. The hotline is available Monday through Friday from 7:30 a.m. to 4:30 p.m. CT.

Requirements for all custom beneficiary designations

• The Edward Jones retirement account number must be included on each document.
• The client’s signature must be dated within 60 days of receipt at the Edward Jones home office.
• The custom designation language must provide clear instructions to Edward Jones or clearly indicate from whom Edward Jones may accept instructions upon the client’s death.
• The language cannot require Edward Jones to make discretionary decisions about the designation.

Edward Jones will not determine what calculations are included or make any other discretionary decision. Therefore, it’s critical for all relevant custom designation documents to provide sufficiently detailed designations or indication of who can give instructions when needed.

For individuals designated as beneficiaries

• Full legal name
• Full Social Security number
• Date of birth
• Relationship to the account owner (spouse, child, etc.)

Good Example: 100% to Jane Doe, spouse; whose Social Security number is xxx-xx-xxxx, and whose date of birth is xx/xx/xx.

Good Example: 100% to Jane Doe, spouse
Social Security Number: xxx-xx-xxxx
date of birth: xx/xx/xx

Bad Example: 100% to my spouse

If any individual who is designated as a beneficiary is not a citizen or resident of the United States, Edward Jones requires the citizenship and residency of that individual. At the time the individual claims assets, their Tax ID number from their country of origin will be required on Form W-8BEN.

Good Example: 100% to Jane Doe, spouse; resident of France, date of birth is xx/xx/xx.

For per stirpes  distribution

• Full legal name of the individual whose descendants are designated
• Social Security number of the individual whose descendants are designated
• Date of birth of the individual whose descendants are designated

Good Example: 100% to John Doe, if then living, otherwise to his descendants per stirpes; Social Security number of John Doe: xxx-xx-xxxx, date of birth of John Doe xx/xx/xx.

Good Example: 100% to the per stirpes descendants of John Doe; Social Security number of John Doe: xxx-xx-xxxx, date of birth of John Doe xx/xx/xx.*
* Note: In this example, the beneficiaries are John Doe's descendants, not John Doe; even if John Doe is alive at the time of the account owner's death.

Bad Example: 100% per stirpes

Bad Example: 100% to John Doe, per stirpes

For organizations or charities designated as beneficiaries

• Entity’s legal name
• Entity’s tax ID number

Good Example: The ABC Charity
Tax Identification Number: xx-xxxxxxx

Bad Example: The local ABC Charity

The designation should not include any specific purpose for which the organization must use the funds. Edward Jones is unable to control how the charitable beneficiary utilizes the designated assets. If the client has a specific purpose in mind, the client would need to contact the charitable organization to determine if any special process or forms are needed.

If a client insists that their custom drafted beneficiary designation still indicate a specific purpose for which the organization or charity must use the funds, the designation must also include a statement indicating that the client understands Edward Jones is not responsible for how the organization or charity uses the funds.

Good Example: 100% to the University of California, to be used for brain cancer research. I understand Edward Jones is not responsible for ensuring that a beneficiary named in this designation uses the funds received through this beneficiary designation in any particular manner.

Bad Example: 100% to the Wildlife Fund, ½ to be used for the benefit of the birds, and ½ to be used for the tigers

For trusts designated as beneficiaries

Living trust:

• Trust’s title or name
• Original date the trust agreement was executed by the grantor/settlor

Good Example: 100% to the John Wayne Doe Revocable Trust U/A dated 01/01/01

Good Example: Jane Doe Sub-Trust Under the John Wayne Doe Revocable Trust under Agreement dated 01/01/01

Bad Example: My Trust dated 01/01/01

Testamentary trust:

• Trust’s title or name
• Date of the will executed by the testator under which the testamentary trust is created
• If the will creates more than one trust, specific details to identify which trust is being designated

Good Example: 100% to the John Wayne Doe Testamentary Trust U/W dated 01/01/01

Good Example: Testamentary Trust FBO Jane Doe Under the Will of John Doe dated 01/01/01

Good Example: 100% to the Testamentary Trust of Jane Doe under my Last Will and Testament admitted to probate upon my death

Bad Example: Testamentary Trust under my Last Will

For trust shares or multiple subtrusts

The designation must include language that indicates from whom Edward Jones may accept information and instruction regarding the following:

• How many separate shares are being created
• The name of each separate trust or subtrust which will receive assets
• The person who will be responsible for determining the amount of assets to transfer to each separate share trust or subtrust, if applicable

The designation cannot include specific terms of any trust entitled to receive the assets, and Edward Jones cannot accept variations which alter the Edward Jones Custodial Agreement.

Good Example: 100% to a separate share for each of Janet Doe's descendants per stirpes, to be held in a trust for each descendant created under Article 5 of the Janet Doe Trust agreement dated 01/01/2001. Edward Jones shall rely solely on information provided by the then acting trustee of the Janet Doe Trust under agreement dated 01/01/01 in determining the number of separate share trusts to be created, the name of each trust and to identify the assets from my IRA to be transferred to said trusts. On behalf of my estate and the Janet Doe Trust under agreement dated 01/01/01, I hereby indemnify and hold Edward Jones harmless for relying upon such instructions from the then acting trustee of the Janet Doe Trust.

Good Example: Equal shares to my children; each share shall be distributed to the trustee of the trust created in accordance with Article 100, paragraph 1.1.2 of the Mary and Michael Doe Revocable Trust Dated 01/01/01. Edward Jones shall rely solely on information provided by the then acting trustee of the Mary and Michael Doe Revocable Trust dated 01/01/01 in determining the number of separate share trusts and the name of each separate share trust. On behalf of the Mary and Michael Doe Revocable Trust dated 01/01/01, I hereby indemnify and hold Edward Jones harmless for relying upon such instructions from the Trustee of the Mary and Michael Revocable Trust dated 01/01/01.

Bad Example: Per stirpes shares for my surviving descendants per the Jane Doe Revocable Living Trust dated 01/01/01.

Additional considerations

• If a designation includes a formula calculation, the designation must include language that indicates from whom Edward Jones may accept instruction and information such as calculated amounts. The designation should also include a statement indemnifying Edward Jones for following these instructions.

Good Example: A fractional interest in the IRA Account in which the numerator is equal to $75,000 and the denominator is equal to the fair market value of the IRA, to John Doe, SSN XXX-XX-XXX, date of birth 01/01/2001; Edward Jones shall rely solely on the then acting representative of my Estate to calculate the amount, value and/or share quantity of assets or value of assets to be transferred to the beneficiary, and to transfer assets from my IRA to said beneficiaries. On behalf of my Estate, I hereby indemnify and hold Edward Jones harmless for relying upon such instructions from the representative of my Estate.

Bad Example: A fractional share of the balance in the account, the numerator of which shall be the lesser of (a) the balance in the account at the date of my death, or the sum of $500,000, and the denominator of which shall be the balance of my account.

• The designation must include language that indicates how Edward Jones will fulfill dollar designation requests. This includes what assets to use in what order, sales of account assets for cash proceeds, and order to fulfill dollar beneficiary designations if there are not enough assets in the account to fulfill all requests.

Good Example: $10,000 to Cindy Jo, SSN XXX-XX-XXX, DOB 02/01/01, $10,000 to Jody King, SSN XXX-XX-XXX, DOB 03/05/17 and the remaining assets to Joel Doe, SSN XXX-XX-XXX, DOB 12/25/87. Edward Jones will use the Account assets in the following order to satisfy the dollar beneficiary designations specified; (1) cash; then (2) money market; then (3) cash proceeds generated from selling the remaining account assets in alphabetical order within each of the following categories; (a) mutual funds; then (b) stocks; then (c) bonds. If necessary, Edward Jones will sell mutual funds in the Account (in alphabetical order by name of issue) to satisfy the dollar beneficiary designations before selling any stock or bonds). If there are not enough assets available in this Account to satisfy all of the dollar beneficiary designations, then Edward Jones will satisfy each designation in full in the order they appear until assets are exhausted: (i.e. if three people are designated to receive $100 each, and the Account has only $120 of assets, then the first beneficiary will receive $100, the second beneficiary will receive $20, and the third beneficiary will receive nothing).

Bad Example: $10,000 to Sam Smith, SSN: XXX-XX-XXX, DOB: 12/01/73 and the remaining assets to ABC Charity TAX ID: XX-XXXXXX.

Common pitfalls

When a power of attorney or court-appointed fiduciary is signing a beneficiary designation on behalf of a client:

The fiduciary must be authorized to designate, change or revoke the designation on behalf of the incapacitated account owner in order to execute a new or modified designation. The governing document (court order, power of attorney agreement, etc.) must clearly indicate the fiduciary’s authority regarding beneficiary designations.

If a client is incapacitated and the fiduciary does not have clear authorization, Edward Jones will not accept the fiduciary’s signature on any designation that differs from a designation signed by the client prior to incapacity. If no such prior designation exists, then Edward Jones will treat the client’s estate as the sole beneficiary.

Letter or memorandum from attorney with client instructions:

Edward Jones does not accept as part of the actual designation a letter or memo from an attorney addressed to a client including instructions to the client on how to designate beneficiaries of their retirement assets.

The language provided by the attorney in any such communication to the client may be copied to a beneficiary designation document and provided by the client to Edward Jones. Any such designation must also include the Edward Jones account number, any other required information as described above (full legal name, Social Security number, date of birth, etc.) and a currently dated client signature.