It’s a New Year and a Good Idea to Check Your Beneficiary Designations


You’ve been diligently monitoring your retirement accounts with your financial advisor to ensure that your investments align with your goals and risk tolerance. Regular plan reviews have given you confidence that your legacy planning is on track.

In simpler terms, you’re doing well and taking every necessary step to ensure little is left to chance. Except . . .

Make any necessary beneficiary updates for your loved ones.
Make any necessary beneficiary updates for your loved ones.

Have you taken the time to carefully review the beneficiary designations on your IRAs and other financial accounts? Perhaps you opened the accounts many years ago when your circumstances and the individuals you wanted to benefit were different. Have you made the mistake of naming your estate as the beneficiary for one or more of your retirement accounts?

In short, have you taken any actions that might expose your beneficiaries’ assets to avoidable taxes or potential disputes?

Did you know?

Many of us underestimate the consequences of the boxes we check and the folks we name when filling out forms to open retirement accounts. For example, did you know …

  • The beneficiary designations on retirement accounts and other financial documents can supersede the terms of a trust or a will?
  • Naming minor children and persons with special needs often comes with tax and legal implications?
  • Using generic designations such as “all my children” can complicate the transfer of assets when a child predeceases the account holder, leaving it to the plan administrator to decide whether to transfer assets to the deceased child’s heirs or to divide them among the surviving siblings?

It’s common to unintentionally overlook the beneficiaries named in the past. Ex-spouses, former boyfriends or girlfriends and even deceased relatives have been named as beneficiaries. Had the benefactors been more mindful, they would never have intended such arrangements.

So, take the time to make the necessary updates and changes for yourself and your loved ones as soon as possible. Begin by reviewing your financial plan and discussing your beneficiary designations with your advisor. Ensure that your beneficiary designations are current, accurate and aligned with your financial legacy goals.

Need a specialist?

You may need to consult an estate planning specialist for help designing a trust to serve as the beneficiary for some or all your assets. While my office does not provide estate planning services, I can refer clients to a qualified estate planning specialist.

As we begin a new year, it’s the perfect time to carefully review your designated beneficiaries and make any necessary changes. By taking this important step, you’ll not only have peace of mind but also ensure that your loved ones are protected from any unexpected surprises.