Who Are Your Beneficiaries? Are You Sure?

I’ve been working with a client who is in the process of settling their deceased father’s estate, and dealing with the many issues that have arisen as a result.  One of the father’s retirement accounts was left without a named beneficiary, and it’s caused some issues that could have been easily avoided.  It’s hard enough for family members to deal with the emotional issues surrounding the loss of a loved one.  Take a few minutes today to make sure that the lack of (or an outdated) beneficiary information doesn’t further complicate their life at a difficult time.

Think for a moment.  Have you had a major life change?  Did you get married or divorced?  Did you have a child, or another child?  Are you certain that your beneficiaries are up to date?  That the person you want to inherit those assets will receive them?   Every planner I know has run across a situation where a previous spouse has inherited an asset long after the marriage was dissolved, simply because the beneficiaries weren’t updated.

Now, you might think that because you’ve updated your will, you’re all set.  That would be incorrect.  A number of accounts pass at death according solely to the beneficiary listed on the form so it pays to double-check.

So what accounts should you check?

  1. Insurance:  Do you have any life insurance policies?  That you purchased directly from the carrier?  That are provided at work?
  2. Retirement Accounts:  Any Traditional IRA, Roth IRA, 401(k), 403(b), or pension plan that you have will have a listed beneficiary.  Are you certain that they’re up to date?
  3. 529 College Savings Plans:  These are a little different, as the beneficiary is the future college student, and that doesn’t change if you die prematurely.  You should name a successor owner to inherit and manage the account if you’re not around to do it.

A few minutes making a quick list of these accounts, with the beneficiary designations, would be a great list to include with your wills and other important documents.  It can go a long way to making a difficult transition easier, and giving you peace of mind that your affairs are in order.