As you’re preparing your affairs for tax season and reviewing your accounts, now is the perfect time to review your designated beneficiaries on your insurance policies, financial and retirement accounts.
What is a designated beneficiary?
A beneficiary is someone who is entitled to receive proceeds from you accounts such as life insurance, retirement accounts, financial accounts, etc.
Why is a designated beneficiary important?
If you don’t name a beneficiary, the person who receives the proceeds from your accounts could be decided in court upon your death, and may not be decided the way you would intend.
It’s particularly important to review beneficiaries if you’ve experienced a recent life change, such as a marriage, divorce or birth of a child.
While it’s common to believe that whomever you name in your will trumps the designated beneficiary on file, it’s actually the named beneficiary who could override your will.
Try and avoid any heartache or confusion (and a potential legal battle) for your family members and loved ones by making sure the wording in your will matches your designation beneficiary.
- If you are divorced is your ex-spouse still listed as your beneficiary? If so, he or she will get your money upon your death, even if that’s not your intent.
- Have you recently remarried? Have you updated your beneficiary to designate your new spouse?
- Would you like your children to be your beneficiaries? Have you checked to make sure all of them are listed?
Note: For qualified plans, such as a profit-sharing plan or 401(k), regulations cite that the spouse of the account-owner is automatically specified, unless the spouse signs a document saying he/she approves of the decision of another designation.
If you need assistance updating your beneficiaries on any of your accounts with Legacy, please give us a call so we can assist you.