Have you reviewed the beneficiary designations on your financial accounts lately? Many people forget to update their beneficiaries for one reason or another. Most people designate a beneficiary(ies) when they open their accounts, which could have been 10, 20 or maybe even 30 years ago. It is advisable to periodically review all of your beneficiary designations and amend any that are out-of-date. You might also want to name secondary beneficiaries. If your primary beneficiary dies before you do, those accounts will be the subject of a Probate proceeding, which can be costly and time consuming.
Here are several reasons you might want to update your beneficiary designations:
1. You’ve changed jobs and rolled over your retirement plan. If you move money from your former employer’s retirement plan into a new one or into an IRA, your beneficiaries lose any claim to those assets. You will want to ensure they are named as beneficiaries on the new account.
2. You got divorced or remarried. If your designation is not updated, or a secondary beneficiary is not named, when you die, this could get messy. This, once again, can be costly and time-consuming if this is involved in a Probate proceeding.
3. Your primary beneficiary died. If you named a second beneficiary, he or she will move up to primary status, but you will now want to name a new secondary beneficiary.
4. Your financial institution changed ownership. When brokerages, banks and mutual funds merge, they sometimes drop the beneficiary designations on older accounts.
5. You had a child or grandchild. You won’t want to designate a child under 18 years of age as a beneficiary. If you do, a guardian of the property will have to be appointed to manage the assets until the child reaches the age of 18. Instead, create a trust for his or her benefit and name the trust as the beneficiary. This will allow the child to inherit your financial assets. That way you can control the terms under which your child/grandchild has access to the funds.
6. Your beneficiary became disabled. If this has happened, you will need to amend the designation or this could jeopardize the beneficiary’s eligibility for government benefits. It is best to set up a Supplemental Needs Trust for the benefit of the disabled person and designate the trust as the beneficiary on your accounts.
For more information on Trusts or Special Needs Trusts, please contact our office at 314/962-0186 to set up an appointment.