Yes, I have a soap box. Yes I get on it frequently. Here is one topic that causes me to climb on it once again. One of the main things I keep telling our clients (and they get tired of hearing it) is to double check your beneficiary designations on your IRA, 401K, Annuity and accounts and oh, don’t forget your life insurance policies.
BEST PRACTICE – CHECK, UPDATE, PRINT, FILE
Not only should you check them regularly, you need more than a verbal confirmation of who are the beneficiaries on those accounts – you want to get a printed confirmation for your records.
Problems we have seen:
- Corporate Benefits
Companies change benefit providers periodically either through an internal change in providers or through mergers and acquisitions. When there is a change, DON’T ASSUME that your beneficiary designations made it through the change. CHECK, UPDATE, PRINT, FILE
- Things Change
As time goes by relationships change usually because of marriage, divorce, births and deaths. Your beneficiaries needs to be updated as these things happen. CHECK, UPDATE, PRINT, FILE
- Costly Designations –
When you set up your beneficiary designations and you put your estate as the beneficiary or you try to craft your own wording to refer to your will, you have just entered the room of costly mistakes. For example, With your IRA, if you don’t put an actual person in there, you have just caused your heirs to miss out on a great savings/growth potential, you accelerated the payment of income taxes and your opened up that part of your estate to creditors. CHECK, UPDATE, PRINT, FILE
What seems like a straight forward concept can easily go awry. So, again – CHECK, UPDATE, PRINT, FILE.
Check out this story that aired yesterday about a slight mistake in beneficiaries that cost a man’s children $400,000.
OK, I will get off my soap box now. Carry on.