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.
- 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.
- Forgetting to name contingent beneficiaries or consider disclaimers: Importantly, plan for the event that your selected beneficiary predeceases you.
- 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.
- Forgetting to update beneficiary designations: Beneficiary designations override a person’s will. It is therefore important to keep these designations updated.
- Failing to keep beneficiary designation forms on file: Before submitting a beneficiary designation form, make a copy for your records.
- 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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