Beneficiary Designations Year-End Review

Categories : Financial, News
October 25, 2023

According to my calendar (which I thoroughly believe must be lying to me, because we can’t really be this close), there are only a couple of months left until Christmas, 2023. By then, most Americans are pretty much done making financial decisions for the year, not really thinking about business until sometime in January 2024. We have been stressing the need to complete a few financial items prior to singing along to Auld Lang Syne.

Deferring certain items past year-end may not cause actual harm to an investor, but too often it results in another year going by without reviewing, updating, correcting, or even initializing important details. Among our favorite pursuits, this time of year is encouraging clients and radio listeners to revisit their Beneficiary Designations before year-end. Failure to stay current can be disastrous, resulting in assets being distributed to unintended recipients.

Over half of adult Americans, including attorneys, do not have a Will and/or a Living Trust. If you have one or both, review the Beneficiary Designations at least annually. They need to reflect the life-altering changes we all periodically incur. If you don’t have at least a simple Will, make an appointment with an attorney to get it done. This should also include your medical directives and Powers-of-Attorney. Costs are reasonable and can be shopped around to find a good fit at a reasonable price.

Retirement Accounts, whether Pensions, IRAs, or Qualified Retirement Plans, pass at the owner’s death to Named Beneficiaries, which means those whose names appear in the Plan documents as being successor owners. Keep them current, starting right now, to avoid unintended consequences.

Account custodian changes, such as TD Ameritrade recently becoming Charles Schwab, often require new paperwork, and keeping Beneficiary Designations up to date will eliminate potential confusion later. This can also happen when you change financial advisors or begin working with an advisor.

Here’s one most people will never consider. Nearly 20% of assets in 401(k) (and similar) Plans belongs to ex-employees. Aside from being a poor investing strategy, how many of these old accounts are forgotten, and have never been reviewed for possible changes to Beneficiary Designations?

Life insurance and annuity contracts also need accurate Beneficiary Designations. Most people cannot even quickly produce their actual contracts, and may not realize that their Designated Beneficiaries may need updating.

Performing a complete review of Beneficiary Designations is an easy method of assuring an orderly transition of assets when the inevitable happens, either with warning or without. We can help.

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