Keeping Beneficiaries Up To Date

Regardless of what your will specifies, the beneficiaries you list in your various financial accounts will receive those assets. It is extremely important to conduct a beneficiary audit at least once a year, as well as when there are major changes such as a marriage, divorce, birth of a child or grandchild. Here are some guidelines to keep in mind:

"Your Wealth advisor can help you review beneficiary designations within the context of your overall financial strategy, working to optimize estate and income tax implications for your beneficiaries."

Review the designations for all of your accounts, including:

  • Life insurance policies
  • IRAs, 401(k)s, pensions and other retirement accounts
  • Securities accounts [payable on death]
  • Annuities

As relationships often change over time, it is not unusual to find that designations made earlier may be quite different from what you prefer now.

Special situations also need to be taken into consideration. If a minor is the current designee, you will need to name a trust as the beneficiary until the minor reaches adulthood or the age you designate.

If a beneficiary has special needs, has difficulty managing money, or has some form of addiction, you may want to designate a trust as beneficiary. The benefit is that a trustee then decides when and how much will be distributed to the beneficiary, providing protection of the assets in the beneficiary’s best interest.

A beneficiary audit can save estate and income taxes, avoid legal intervention, protect against creditors and ex-spouses, and provide for beneficiary well-being. Your Wealth advisor can help you make the changes you need to keep your estate plan up-to-date.


This article originally appeared in the Summer 2013 issue of Wealth magazine.

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