Have you reviewed your beneficiary list recently? Why should you do this? Some of the biggest headaches experienced by tax, legal and financial advisers occur when their clients are not current with their beneficiaries.
During a meeting of older adults, I had a woman admit that her mother was her beneficiary. In the same breath, she mentioned that her mother had been dead for 14 years. I highly encouraged her to change her beneficiary as soon as possible.
If you have not left clear and up-to-date instructions, your heirs will face real legal obstacles; sometimes long and expensive legal and family disputes result, often not ending well. Many of these mistakes are so easy to avoid: simply check your beneficiary forms while you are still breathing! Encourage your family members to do the same.
Any big life event – such as a birth, a death, a marriage, a divorce, a remarriage, a new grandchild, or a change in the tax law – is a reason to revisit your beneficiary forms. My brother-in-law had three brothers and all three had been through divorce; there were children and remarriages. In those situations, updating beneficiary forms is critical.
Avoid the headaches. To avoid beneficiary form problems, it is important to name a contingent beneficiary in case the primary beneficiary precedes you in death or chooses to disclaim the benefit.
Take an inventory of all retirement accounts and investment accounts — locate beneficiary forms for each one. After reviewing and updating them now, and adding contingent beneficiaries to each, mark your calendar to review them annually. Keep on file a copy of the most current beneficiary form for all your accounts, and make sure your family members know where to locate them.