Over the years we commonly accumulate multiple bank and investment accounts, 401(k) and other retirement accounts, plus a number of insurance policies, most of which called for you to designate a beneficiary at the time you opened the account or first took out the policy.
Depending on how many years it’s been, you may find that a number of things have changed in your life since you first filled out the beneficiary information and that you need to update your beneficiary designations. Divorce, marriage, children, grandchildren and career changes are a few of life’s events that could trigger a need to change your beneficiaries.
A comprehensive beneficiary review is a simple way to ensure that your assets go to exactly who you intend for them to go to. The first step is to determine the different places where you have listed a beneficiary. Your will, any trust documents, IRA accounts, 401(k), 403(b), annuities, pensions, brokerage accounts, bank accounts and Certificates of Deposit, life insurance policies, disability policies and long-term care policies all should be checked. Accounts with specified beneficiary designations will be paid out in accordance with those instructions even if an individual’s will specifies different designations.
For each account you identify, you need to make sure that a primary and contingent beneficiary is named, and that the percentages add up to 100%. It’s common to have your spouse designated as the primary beneficiary and your children designated as contingent beneficiaries, but what if some or all of the children are minors. A trust may be required to protect a beneficiary from mismanaging the proceeds from a life insurance policy or other account. Make sure that all forms are completed properly, having them notarized or witnessed if necessary.
It’s important to review your beneficiaries every few years. We never know what life has in store for us. Make sure your legacy ends up the way you would have intended it to.
— Don Karlewicz, CPA, CGMA, Managing Partner