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Beneficiary Designation

Some people may not be aware that the money in most bank accounts, retirement plans, and insurance policies convey directly to the people named on the beneficiary forms, even if they are different from the people named in their wills or trusts. Others simply forget to make the appropriate changes in writing. If your beneficiary forms are out of date — and your intentions somehow become a matter of dispute — state and/or federal laws or the administrator’s plan documents could ultimately determine who receives your monies.

Make It An Annual Task

It’s generally a good idea to review your beneficiary designations annually, and to make adjustments when there are changes in your life that could affect your choices, such as the birth of a child, the illness or death of a family member, marriage, divorce, and especially remarriage.

Is It Easy To Do?

It’s fairly easy to update your beneficiaries. You can simply file a new beneficiary designation form with the appropriate financial institution or insurance company. Here are a few other things to consider when naming new beneficiaries.

  • Many laws favor spouses, so be careful when you intend to name someone other than your spouse as a beneficiary.
  • Don’t name minor-age children without making arrangements for a guardian or trustee to control the monies until the beneficiary is old enough to manage them.
  • Request an acknowledged copy of each new or updated beneficiary form from the financial institution (or print a copy if filed electronically) and store them with your other important documents.
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