Because life happens and circumstances change, it is important to do a beneficiary review every couple of years at least. Some of the changes are easy to identify — marriages, divorces, children and career changes, just to mention a few.
When you do a complete beneficiary review, the first step is to consider all the places you have beneficiaries indicated. That includes your will and/or trust, IRAs, 401k and 403b and other retirement accounts, life insurance and disability insurance policies, long-term care insurance, annuities, pensions, broker accounts and some existing bank accounts, just to mention a few.
Then, on the various forms, you should be sure you have indicated a primary beneficiary and a contingent (or more) beneficiaries. Make sure the total of all the shares add up to 100 percent. If you don’t have the form to indicate changes, call the custodian, insurance company, bank, broker, etc. to get the form to use.
It is very helpful to file copies of the beneficiary designations with your other estate planning documents (will, trust, powers of attorney, etc). Some folks mail copies to the custodian, insurance company, etc. with priority mail or certified mail to prove it was received.
One of the saddest surprises is for a beneficiary to discover after a death that they are not named as promised or expected. One case was a retirement account at the state that did not list the current wife as beneficiary. By mistake, no correction was done after the divorce, and the prior wife inherited a substantial amount.
By doing a beneficiary review, you avoid unintentionally harming those you love and favor. You are in charge of your life. You can be sure whatever you leave behind at death goes to the ones you choose.
Some bank accounts can be designated “TOD,” for “Transfer on Death,” or similar indications. Those will work OK. However, you might want to be sure if you have some children or other beneficiaries that are not listed on that account that they don’t end up with less inheritance than you wanted them to have.
Because banks and insurance companies go through various computer changes as well as mergers, sometimes the beneficiary designations they should have on file are difficult to find. That is why it does not hurt to check with them and be sure they have up to date beneficiary designations.
After you have completed your work on verifying, correcting and where desired changing beneficiary designations, why not do a family meeting and explain what you have done and why? Most children are curious, but don’t want to ask. It is up to you to volunteer the information so there are not major surprises later. That’s a good time to tell again of your values and beliefs. All that may encourage the children to put their finances, estate planning and beneficiary designations in order.
Did you hear? “No matter what happens in life, be good to people. Being good to people is a wonderful legacy to leave behind,” Taylor Swift
John Bullis is a certified public accountant, personal financial specialist and certified senior adviser who has served Carson City for 45 years. He is founder emeritus of Bullis and Company CPAs.
