When you look around your holiday table this year, you will probably not be thinking about the beneficiary designations on your 401(k), IRAs or life insurance policies. But you should… perhaps make it a new holiday tradition.
Having the wrong beneficiary designated on these assets and on other things like bank accounts, annuities and 529 college savings plans is probably one of the biggest estate planning mistakes people make. This is because most of us name those beneficiaries when we initiate a plan or open an account and then forget to change or update the designations as our personal and financial lives change.
However, life does change. Often more frequently than we think. This is why you need to review and update your beneficiary designations at least once a year. For example, here are seven scenarios that could cause a change in beneficiary designation:
- You got married, divorced or remarried
- You changed jobs and moved your retirement account
- One of your beneficiaries died
- The birth of a child or grandchild
- You moved your account to another financial institution
- One of your beneficiaries became disabled
- You did created or updated a trust or will
Additionally, it is not uncommon for an institution to incorrectly process a beneficiary designation, especially if you are not designating “standard” beneficiaries.
Not having the correct beneficiary designated (or designating a minor) can wreak havoc on your family when something happens to you as well as create tax issues for your heirs. You could unintentionally disinherit the very people you care the most about and potentially tie up your estate in probate or, worse, litigation.
Enjoy your holiday with family, but take an hour or two before the New Year and make it a point to review your beneficiary designations and , if necessary, update them.
If you don’t already have an estate plan – or have one that needs to be reviewed and updated – make 2014 the year you get this done. Please call us today to schedule your appointment at 720-248-7621.
