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It’s Time to Review Beneficiary Designations


Many assets don’t pass through a will or the probate process. Instead, you name a beneficiary on the policy itself. This is particularly true regarding life insurance policies and retirement accounts like a 401(k) or an IRA. You might have other payable on death (POD) or transfer on death (TOD) accounts that have a beneficiary designation.

When you opened the account or policy, you should have designated a beneficiary. However, years or decades could have passed since that day, and your estate planning goals or needs probably have changed. For example, it isn’t unusual for young workers to name a parent as the beneficiary of a retirement account, especially when they are unmarried. If you are now married, you will probably want to change the designation.

Find Accounts with Designated Beneficiaries

Some of the more common include:

  • Life insurance policies
  • 401(k) and 403(b) accounts
  • Individual Retirement Accounts (IRAs) and Roth IRAs
  • Bank accounts that have been designated as payable on death
  • Certificates of deposit identified as POD
  • Stock certificates registered on a TOD form

Go through your financial history. If you’ve worked a lot of different jobs, you might have employer-sponsored retirement accounts with many of them. Now is a good time to roll everything over into one account or at least talk with a financial advisor to check whether that is a good idea.

Identify Beneficiaries

Check who you initially named as the beneficiary and decide whether you want to retain or change the designation. Many life events can trigger a change of beneficiary, including divorce, marriage, the birth of a child, and the death of a spouse.

Also consider your overall estate planning goals. You might want to keep things roughly equal between three children. Leaving a retirement account to one child can create an imbalance if your will divides all assets equally. Now might be the time to re-evaluate your will or trust and change how you are leaving assets.

Should You Name Your Estate as the Beneficiary?

Naming the estate as the beneficiary has advantages and disadvantages. One advantage is that you might want to leave an account to multiple people. You might name one beneficiary and expect him or her to redistribute the money to others. Instead, they legally could keep all of the money for themselves. Naming your estate could be an attractive option if you want to split the asset between several people and you can’t name more than 1 or 2 beneficiaries on the policy or account.

However, there are disadvantages you should discuss with an attorney. As an example, your heirs might have fewer options for receiving income from a retirement account if it is left to an estate.

Talk to an Estate Planning Lawyer in The Villages

Millhorn Elder Law Planning Group has created estate plans for thousands of people in The Villages. For help, please contact one of our attorneys for a free consultation. We will listen to your goals and use our legal experience to draft a plan that works for you and your family. Call our estate planning attorneys at 800-743-9732 today.






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