Note to Self: Check Beneficiary Designations

When was the last time you checked the status of your account beneficiaries? Two years ago? Five years ago? Can’t remember?

Even if your will and estate conservation strategy are well thought out and in perfect order, assets in accounts such as retirement plans, annuity contracts, and life insurance policies pass to the designated beneficiary on the account documents. As a result, an incorrect or outdated beneficiary designation form could spoil your best intentions.

Life-changing events such as divorce, the birth of a child or grandchild, the death of a loved one, or even a job change should always prompt a review of your beneficiary designations.

If your beneficiaries were named years ago, it’s easy to forget that they may not be in line with your current situation. Even if your will clearly lists your spouse as your current heir and your wishes seem obvious, an institution must follow the instructions on the designation form. The same situation can occur when account holders neglect to remove former spouses or forget to add children or grandchildren after they are born.

If you fail to designate a beneficiary on account designation documents, your heirs may be determined by federal law, state law, or the plan document that governs your retirement accounts, rather than by your own wishes.

Keeping a copy of all beneficiary forms in an easy-to-access file may make it more likely that you will remember to make the necessary changes in order to keep them current. It’s also a good idea to keep copies with your will and to have your attorney coordinate them with the rest of your estate plan.

Outdated beneficiary forms have the potential to cause needless grief and hardship for surviving loved ones who are your intended heirs. Fortunately, checking your beneficiary designations takes little time and is certainly worth the extra effort.

The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by StoneRiver–Emerald. © 2009 StoneRiver, Inc.