5 Steps to Review Your Beneficiary Designations

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Nov 01, 2019

Are your beneficiary designations up to date? Do you even know which accounts have beneficiaries and whom you have designated? It is easy to lose track. But it is important to keep them current. Here is why (plus a few steps to manage your review process):

  • Your assets go to the intended recipients (and avoid probate). When you designate a beneficiary for certain accounts, that person inherits the assets in the account, regardless of what your will might say. That is why updating your will periodically might not be enough. Typically, you will have beneficiaries for each of your IRAs, your 401(k) or other retirement plans, annuities and insurance policies. The only way to ensure your assets will go to the intended recipients and avoid a long drawn out legal process (probate) is by reviewing your designations on an annual basis.
  • A life event alters your beneficiary designations. Since you made your initial beneficiary choices, you might have married, had children or divorced. Some of the beneficiaries you chose could have married, divorced or passed away. Or their circumstances could have changed so you no longer want them to be the beneficiary. Going through your list of beneficiaries will help you determine if the right recipients are accounted for, and if you need to make changes.
  • Your wealth increases or decreases. Maybe you sold your business or inherited a trust. Or you have experienced poor investment portfolio performance. As your wealth changes, you will need to consider how it affects your estate planning, and whether or not your beneficiaries still fit with your strategy.

Reviewing your beneficiary designations

Here are five steps to help you review and organize your beneficiary designations:

  1. Obtain copies of the designations for the following (when applicable):
    • Will
    • Insurance policies
    • Bank accounts
    • Retirement savings accounts (IRAs, 401(k)s, etc.)
    • Company benefits
    • Pension
    • College savings accounts
    • Annuities
    • Investment accounts
  2. Request copies if your records are missing.
  3. Review the designations. Make sure that assets are going where you want and that you are minimizing taxes.
  4. Send in revised designations to the account custodians. Obtain a written acknowledgment for each change you make to your beneficiary designation. Please be aware that banks and insurance companies sometimes lose forms, and that could thwart your careful planning.
  5. File the acknowledgments with your will and other estate planning documents.

Review your designations at least once a year to make sure they are still appropriate. They may be simple forms, but they are too important to ignore.If you would like assistance with this, please reach out to your investment advisor representative at World Trend Financial.They can be reached at 319-364-3041 in Cedar Rapids, or 319-339-4884 in Iowa City.