5-Minute Fix: Springtime Means Updating Beneficiaries On Your Accounts

OK, we made that up. But now would be a good time to do some “spring cleaning” and dust off those beneficiary designations.

In fact, we’ve been doing just that. In several recent meetings, we’ve been spending time with clients to discuss and update the beneficiary designations on their accounts.

You can take a few minutes to do your own update. Here’s what to look for:

Make sure you’ve named primary and contingent beneficiaries on all your accounts, including retirement accounts, insurance policies, and other asset accounts. After your death, assets will pass to your primary beneficiaries. If they die before you, assets will next pass to the contingent beneficiaries.

We submit all beneficiary designations in writing to the account custodians (the company that actually holds the assets), but to be safe, we always keep a signed and dated copy on file. As an additional precaution, go online and double-check that your beneficiaries are listed correctly with your custodian and print out a copy for your records.

Leaving assets to minors? It’s hard to tell if a minor will ever inherit (let’s face it, you’re still alive and no one knows how old the kids will be when you pass away), but every account custodian has different rules involving minors inheriting property. Some may require that property pass to a court-appointed guardian. We’ve been lucky with one of our custodians, who has allowed property – including Inherited IRA property – to pass to the minor with their parent serving as legal guardian. That makes life easier.

Rule of thumb: don’t ever leave a beneficiary designation blank or name your “Estate” as the heir. Doing that can raise multiple complications relating to creditor protection, probate avoidance, and unfavorable tax consequences. Talk to your attorney and financial advisor for beneficiary tips.

About Mari Adam

Mari Adam, Certified Financial Planner™ has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!


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