Updating Beneficiaries is Critical

There are several things you may not realize about the importance of updating your beneficiaries.  Just because you may have a will or a trust, and you have listed beneficiaries and percentages, this may not happen with all of your assets.

For example, an IRA may list your oldest son as the contingent beneficiary.  Your will may state that your three sons and one daughter are to share equally in the disposition of all of your assets.  You incorrectly assume the IRA will be included in the pot and be divided accordingly to your wishes.  It will not! The IRA beneficiary designation will take precedence and the other children will be left out of this part of their inheritance.  You may say that your oldest knows that he is supposed to share equally, and even if that actually comes to pass (but remember, there is nothing legally binding him to do so), he is still 100% liable for the taxes on the IRA distribution.  There is no way for him to share that with his siblings.

This happens all too often.  We see life insurance policies whose beneficiaries are deceased.  We see CDs that have a POD (Pay on Death) designation - and they get paid only to the person/persons named, leaving others out - it doesn't matter what your will says.  Annuities work the same way.  They are legal contracts and will supersede a will to inherit the money, thereby inadvertently disinheriting your current spouse or children?  Could get really ugly.

So please.  Regularly check and update all life insurance, IRAs, 401ks, any retirement plans, all annuities, bank accounts, and even brokerage and mutual fund accounts.  You may have "TOD"- transfer on death instructions on your accounts.  It would be a shame to have your assets go to an unintended party, accidentally eliminate a loved one, or have the asset tied up in probate.  All of these potential problems can be avoided very easily.

If you are unsure if you have structured your intended beneficiaries correctly, let us help you.  It could save a lot of money, and more importantly, a lot of unnecessary heartache.

"Lady Fi"

Kathy