Six Beneficiary Designation Blunders

Many individuals do not think twice about their beneficiary designations. After all, a beneficiary designation is as simple as filling in a blank. Due to the relative ease of beneficiary designation planning, however, many people make simple, common mistakes. A recent article discusses six common beneficiary-designation blunders.

  1. Forgetting to name a beneficiary on all retirement accounts: If you do not name a beneficiary, the policy or plan will pay out to the default beneficiary. This may or may not be the person you would have selected.
  2. Forgetting to name contingent beneficiaries or consider disclaimers: Importantly, plan for the event that your selected beneficiary predeceases you.
  3. Failing to be specific in beneficiary designations: Rather than “children,” for example, include specific names. This is especially important when a person has step- or adopted children.
  4. Forgetting to update beneficiary designations: Beneficiary designations override a person’s will. It is therefore important to keep these designations updated.
  5. Failing to keep beneficiary designation forms on file: Before submitting a beneficiary designation form, make a copy for your records.
  6. Failing to consider the financial or emotional readiness of beneficiaries: Without restrictions, a beneficiary will receive his or her distribution outright. Parents may want to consider putting restrictions on inheritances until their children reach a certain age.

For assistance in reviewing your beneficiary designations, contact us at (626) 696-3145


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