Do you remember who you named as beneficiaries?

5 Reasons to Review Your Beneficiary Designations

Over the years, you may have opened multiple financial accounts for which you have named beneficiaries. The assets in these accounts, including life insurance policies, annuities and retirement
funds, will one day pass to those you have named—your beneficiaries.

The advantage to naming beneficiaries is to avoid probate, a legal proceeding that can be expensive and time consuming. The assets in these accounts will go to those you’ve designated, without being held up due to legal technicalities. There may also be tax benefits or tax consequences to your beneficiaries, particularly in the case of assets in an individual or company retirement plan.

Unfortunately, after an account has been established, many people don’t revisit who they’ve named on a regular basis, creating the risk they may, inadvertently, leave a significant bequest to the wrong heir.


When to review the beneficiaries on your accounts:

1 YOUR CIRCUMSTANCES HAVE CHANGED
There are countless stories of well-intentioned individuals who accidentally leave significant sums to the wrong person. Oftentimes, it’s left to an ex-spouse, divorced long ago, whose name  remained on an old but valuable asset. Although some states automatically eliminate ex-spouses as beneficiaries, others do not.

The beneficiary designations you make on your financial accounts supersede your will or a trust in determining who gets your assets. Nonetheless, it’s a good idea to make sure your will and beneficiary designations align to reduce the likelihood that someone will contest your will. If you want to ensure that each of your children and their offspring end up with an equal share of your estate, talk to your estate attorney about leaving your assets to them, per stirpes.

The following situations should trigger a review of your beneficiary designations:

• You got divorced or remarried
• You had a child or grandchild
• One of your named beneficiaries has died

2 YOU’VE HAD A CHANGE OF HEART

You’re entitled to change your mind about who gets your money. What if you become involved with a philanthropy that becomes extremely important to you? You may decide to name that  organization as one of your beneficiaries. Perhaps one of your children contributes vastly more to your eldercare and you want to compensate him or her with a greater inheritance. Align your legacy with your evolving wishes by updating your beneficiary designations.

3 YOU THINK THERE MAY BE A MISTAKE

If one of your financial institutions changed ownership or has merged, there may be a mistake on your account. Beneficiary designations have been known to drop off as a result of account transitions. Additionally, when you rollover a retirement account into an IRA or otherwise convert retirement accounts, beneficiary designations don’t carry over. And, if the beneficiary information you provided to the financial institution becomes outdated, it may be difficult for them to locate your heirs. Information typically required includes their full name, address, date of birth and Social Security number, which should be double checked from time to time.

4 TOO MUCH TIME HAS ELAPSED SINCE YOUR LAST REVIEW

If it’s been several years since you reviewed your beneficiary designations, you may have already experienced a change in life circumstances, a change of heart or there was a change to one of your accounts that resulted in an error. If it’s been more than three years since your last beneficiary review, it’s time.

5 WHEN YOU REVIEW YOUR ESTATE PLAN WITH YOUR ADVISOR

You meet with your wealth advisor regularly to discuss your wealth and legacy goals; make your beneficiary designations an important part of this conversation. Should you decide to change a beneficiary designation, you’ll need to submit a change-of-beneficiary form with the appropriate financial institution. Your Luma Wealth advisor can help guide you.


Take care of the ones you love. Make sure you leave your assets to those you intend to care for by keeping the beneficiaries named to your financial accounts up-to-date. Your Luma Wealth advisor can help you achieve your legacy goals.

For more information, call Luma Wealth, toll free, at 866-995-6191, email info@lumawealth.com.

Download PDF