Do you know who your beneficiaries are? How your assets are titled?
Most people assume that their accounts are titled properly and that their beneficiary designations are correct. Not necessarily so. You may have opened accounts or purchased insurance years ago. The designations and titling of these assets is vitally important.
Lots of former spouses are still named as a beneficiary on accounts. This could lead to a really unfortunate distribution upon your death.
If your spouse has passed away, it is important to change the beneficiary designations on your retirement assets, bank accounts and life insurance policies. It matters. If you have not named secondary or contingent beneficiaries, your heirs could have to open an estate for your deceased spouse in order to receive the distribution of retirement benefits or life insurance proceeds.
Next, it is important to understand that beneficiary designations and transfer on death provisions trump what you have stated in your Will or Trust. This could lead to unwanted results. You may want your estate to go equally to all of your children. If you have listed one child as the beneficiary on your life insurance or IRA, or if you have made them joint on your checking and savings account, the money will not be divided equally. He or she will receive the distribution from the IRA and/or life insurance and then will divide the rest of the estate equally with his or her other siblings.
You may believe that the one child will “do the right thing” because they “know what you want.” Maybe. But maybe not. All it takes is a serious disagreement among your children to change this.
Make certain that your beneficiary designations are up to date and correct. Don’t leave it to chance – check it out.
Make certain that your division of assets is not altered by your beneficiary designations – make certain that your Will or Trust distribution match your beneficiary designations and visa versa.