When you first purchased your life insurance policy or other retirement accounts, you likely designated beneficiaries — and then didn't give them another thought. When was the last time you reviewed the beneficiary designations for your accounts?Even if your will gives different instructions, the beneficiary/ies named on each of your accounts will receive your money. It may be time to perform a beneficiary review to be sure you've named the right people and provided the necessary information for when the time comes.
Various Life Events May Indicate a Beneficiary Change
Throughout life, several events can signal a need to review and possibly change your designations:
- Marriage: If you've married, do you intend to name your new spouse as your beneficiary? If you have children from a prior marriage, do you want them as your beneficiaries? A marriage signals a good time to review your choices.
- Divorce: Does the divorce decree or property settlement agreement require that you name a specific beneficiary for your life insurance policies or insurance contracts? If the decree or settlement agreement didn't require a specific beneficiary to be named, consider if you should make a change after divorce.
- Children/Grandchildren: Has a new child or grandchild been born? Avoid confusion and specifically designate additional children or grandchildren as beneficiaries, especially if you want to divide your assets in a particular way.
- Death of a Beneficiary: Has a beneficiary predeceased you? If you haven't named a contingent, your life insurance or annuity benefits may be paid to your estate. Your heirs may not receive the death benefit until your estate is probated, delaying payment and perhaps resulting in payment to persons you did not intend to financially benefit from your death. Review your policies for any changes due to predeceased persons.
These are only some of the factors to consider — make sure you decide who inherits your assets by updating your beneficiary designations whenever something happens in your life. And if it seems complex, work with a financial professional to help make the best decisions for you.