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Tuesday, September 29, 2015

The Right Beneficiary: Make sure the correct person inherits your IRA or 401(k)

Here’s a simple financial question:  who is the beneficiary of your IRA, 401(k), life insurance policy or annuity?  You may be able to answer quickly and easily, or you might say, “You know…I’m not sure.”  Whatever your answer, it’s a good idea to review your beneficiary designations every few years.

Your choices may need to change with the times.  While your beneficiary choices may seem obvious when you initially make them, time has a way of altering things.   In a stretch of five or ten years, some major changes can occur in your life that may warrant changes in your beneficiary decisions.  You may even want to review them annually and here’s why.  Companies frequently change custodians when it comes to retirement plans and insurance policies and beneficiary designations can get lost in the paper shuffle.  If you don’t have a designated beneficiary on your 401(k), the assets may go to the “default” beneficiary when you pass away, which might throw a wrench into your estate planning.

Naming a beneficiary also helps to keep your assets out of probate when you pass away. Beneficiary designations commonly take priority over bequests made in a will or living trust.  If you named a son or daughter who is now estranged from you as the beneficiary of your life insurance policy, he or she is in line to receive the death benefit when you die, regardless of what your will states.  Beneficiary designations allow life insurance proceeds to transfer automatically to heirs and do not have to go through probate.

Are your beneficiary designations up to date?  Don’t assume and don’t guess.  Make sure your assets are set to transfer to the people or institutions you prefer.  

Posted by: Patrick Carroll at 9:28 AM
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This material is intended for historical purposes and may be outdated. Its contents should not be relied upon as current information. For more up-to-date information regarding these topics, contact your financial professional.

All information herein has been prepared solely for informational purposes, and it is not an offer to buy or sell, or a solicitation of an offer to buy or sell any security or instrument or to participate in any particular trading strategy. Securities offered through Triad Advisors, member FINRA/SIPC. Advisory Services offered through ACI Partners, LLC. ACI Partners, LLC is not affiliated with Triad Advisors.