Why You Should Review Your Beneficiaries Regularly
When was the last time you reviewed the beneficiaries on your retirement accounts, life insurance policies, or investment accounts?
If you're not sure, you're not alone.
Beneficiary designations are one of the easiest parts of a financial plan to overlook, yet they're also among the most important. That's because these designations determine who receives certain assets after your death, and they often take precedence over what's written in your will.
Why Beneficiary Designations Matter
Many financial accounts, including IRAs, 401(k)s, annuities, life insurance policies, and some investment accounts, allow you to name one or more beneficiaries.
When you pass away, these assets are generally distributed according to the beneficiary designation on file, not necessarily according to your will.
That means if your beneficiary information is outdated, your assets could end up going to someone you never intended.
Life Changes...Your Beneficiaries Should Too
Life doesn't stand still, and your beneficiary designations shouldn't either.
It's a good idea to review them after major life events such as:
Marriage or divorce
The birth or adoption of a child
The death of a spouse or beneficiary
A remarriage or blended family situation
The birth of grandchildren
Significant changes in your financial goals or estate plan
Even if none of these events have occurred, it's still wise to review your designations from time to time to make sure they still reflect your wishes.
Primary vs. Contingent Beneficiaries
Many people name a primary beneficiary but forget about a contingent beneficiary.
A primary beneficiary is first in line to receive the assets. A contingent beneficiary receives them only if the primary beneficiary has already passed away or is otherwise unable to inherit.
Having both helps ensure your assets are distributed according to your wishes, even if circumstances change.
Small Oversight, Big Consequences
We've seen situations where someone assumed their will would control the distribution of all their assets, only to discover that an outdated beneficiary designation directed retirement assets elsewhere.
Fortunately, these situations are often preventable with a simple review.
Updating your beneficiaries typically takes only a few minutes, but it can provide tremendous peace of mind for you and your loved ones.
Key Takeaway
Beneficiary designations are an important part of your overall financial and estate plan.
Taking a few minutes to review them after major life events, and periodically over time, can help ensure your assets are distributed according to your wishes and may help your loved ones avoid unnecessary complications during an already difficult time.
If you're unsure whether your beneficiary designations still align with your goals, we'd be happy to review them with you as part of your overall financial plan.
We proudly serve clients across the country, and throughout Southwest Florida with offices in Cape Coral, Babcock Ranch, and Naples, Florida.
If you'd like help reviewing your beneficiary designations or discussing your overall estate planning strategy, we'd love to connect. Give us a call.
239-424-8305
www.dgateswealthmanagement.com
Securities and advisory services offered through LPL Financial, a Registered Investment Advisor. Member FINRA/SIPC.