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The Importance of Naming a Beneficiary

By Dave Verbeke, Financial Advisor

Who gets your assets when you die?  When you own a financial asset like a brokerage, bank, 401k or pension account, the named beneficiary becomes the new owner when you pass.  Is this important? It most certainly is because when you designate a beneficiary, you, not the government controls who gets your assets.  Accounts with designated beneficiaries avoid probate and pass to the beneficiary as soon as the death can be confirmed with a death certificate.  Also, named beneficiaries on an account override any designation that is in your will.  Making sure the beneficiary is correct and up to date is important to make sure your  wishes are carried out.

A best practice is to review your beneficiaries after life events happen such as;  marriage, divorce, death or birth of a child. When these events happen, it is    important to review your accounts to make sure the beneficiary is still the choice you want and their information is up to date. You should have their name, Social Security  number, current address and phone on file with the account manager. Spending a few minutes now can save a lot of cost and heart ache in the future! Just in case you might think this can’t happen to you, I’ve had cases where the ex-spouse was designated as the beneficiary and a case where a lawyer had to be hired to help transfer a life insurance policy where the beneficiary designation was incorrect. Most accounts will allow you to list a     contingent beneficiary which can be your Plan B if the primary beneficiary is no longer living. This is commonly used when the spouse is the primary and the children are contingent beneficiaries.

Call us and we can check to see who the beneficiaries are for each of your accounts. If you have accounts held elsewhere, call the custodian of the accounts and ask them the same question.  If that information is incorrect, contact the company who holds the account and update them with your current wishes.  If you’re not sure who should be a beneficiary on your account, consult an estate attorney or ask your financial advisor for help.