Are your beneficiary designations up to date?
Many of us will update our will after big changes happen in our life—a marriage, the birth of a child, or a divorce—but updating information doesn’t end with your will. It’s important to remember to update beneficiaries on your other personal documents, such as insurance, banking, and retirement accounts as well. You’ll want to review these designations for accuracy at least once a year.
Here’s what could happen if you don’t:
Your assets could go to someone you no longer want to benefit. Fail to change your beneficiary designations and the assets in your accounts could go to someone you no longer prefer. That’s because banks and other financial institutions, such as retirement account administrators and insurance companies, have only the information you give them. So whoever’s listed on the beneficiary designation form is who will inherit your assets. In the case of a divorce, the distribution can potentially be contested, but it will take time, and the person for whom you intended the money still may not receive it.
Account balances could end up going through your estate. Fail to fill out a beneficiary designation form and your assets could end up being distributed with other assets in your will. This means that assets could potentially be subject to fees and taxes when that might not have been the case otherwise.
The state could decide what happens to your assets. If you don’t have a will and you failed to fill out a beneficiary designation, your assets will be distributed according to state law. That means whoever you intended to receive any assets may be out of luck.