“Our clients come to us for advice on how to protect their future. We take that level of trust very seriously.”
- Dan Junkin

The Importance of Beneficiary Designations - First Quarter, 2008

Dan Junkin

Even though we all have busy lives, keeping beneficiary designations up-to-date is very important.  Beneficiaries are the individuals or entities (such as a charity) that you name to receive certain assets upon your death.  What happens to the money in your IRA, 401(k) or life insurance plan upon your demise?  Do you remember whom you have designated as your beneficiary?  Does this choice still reflect your wishes?

Retirement plans allow you to designate a beneficiary.  Completing a beneficiary designation form will override other estate planning.  For example…you named your sibling as your beneficiary while single.  You later married, wrote a will, but failed to change your beneficiary on your IRA and 401(k) plans.  Upon your untimely passing, your sibling would still receive your benefit…not your spouse. 

Before you submit your designation, you may want to consult with your attorney, financial advisor, or tax accountant to ensure your objective will be met.  In most cases, designation problems are noticed only after you are deceased.

Providing name, address, social security number, relationship and percentage for each beneficiary will clarify your wishes.  Federal law requires married participants to name their spouse as primary beneficiary of a retirement account unless their spouse agrees to another named beneficiary.

It is also very important that you have provided both primary and contingent beneficiary designations.  Contingent beneficiaries are designated in case there are no surviving primary beneficiary(s). 

Life changing events necessitate a review of beneficiary designations…marriage, remarriage, divorce, children, death of existing designated beneficiaries.  It is always important to have someone you trust know where your important information is kept…including trust documents, will, deeds, medical directive.

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