Update your beneficiary forms now

If you’re like millions of other Americans, you’ve got a busy life, from work commitments to those in your personal life. So, it shouldn’t come as a surprise that some important things go by the wayside from time to time. But, one thing that you should not let slide is updating your beneficiary forms.

The consequences of failing to check the beneficiary designations on your bank accounts, life insurance policies, retirement accounts, brokerage firm accounts, and others can have terrible consequences. So can failing to fill out the proper forms to designate beneficiaries on these types of accounts.

There are many real-life horror stories pertaining to individuals who experienced life changes but didn’t update the beneficiary forms on important financial accounts or who failed to name the beneficiaries to whom they wanted to leave their assets upon their death.

So, how do you know when to update beneficiary forms? The rule of thumb is, whenever you have a change in your personal circumstances, that’s when you need to update your forms. Major life events such as after marriage(s), divorce(s), births, and deaths, especially if it’s the death of one of your beneficiaries, require the re-examination of your current forms.

Don’t end up in this situation

Financial advisors claim that failure to update beneficiary forms is one of the most common and potentially costly retirement and estate planning errors that savers and investors make. By not updating your beneficiary forms, your assets may wind up going to an ex-wife or estranged child, for example.

If you fail to name beneficiaries because you never took the time to fill out the proper forms, your assets may then pass to your estate or be forced to go through probate court which can end up being a very costly and time-consuming process. Your estate can be forced to withdraw funds to pay bills and settle with creditors. Taxes would have to paid on the withdrawals over a short period of time.

Financial experts recommend reviewing and updating your beneficiary forms every three to five years to see if you need to make any changes.

Staying a step ahead

By establishing a living trust and transferring your assets into that trust, those assets, such as bank accounts, will be transferred to your designated beneficiaries at the time of your death by a representative of your choice, the successor trustee. With a living trust you can avoid the probate process which can save your estate money in the long run.


However, not all of your assets can or should go into your living trust. Examples include qualified retirement accounts such as IRAs or 401(k)s, health savings accounts, medical savings accounts, Uniform Transfers or Uniform Gifts to Minors, and motor vehicles.

Therefore, it’s important to make sure that you update the beneficiary designations on assets that aren’t in your trust, such as life insurance, on a routine basis. Also, it’s important to name one or more secondary beneficiaries in case the primary beneficiary predeceases you.

An estate planning attorney can help you deal with all of these matters. At the Law Office of David W. Foley, our goal is to help you avoid these costly errors as well as the cost and time of probate. Call our office to schedule a consultation.

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