Naming your beneficiaries is a crucial step in ensuring your property passes to your intended parties after you pass away. You can name beneficiaries in your will, trust, insurance policies, and retirement accounts.
However, naming your beneficiaries is just one part of the process. It is also critical that you update your designations periodically. Knowing when and where to do this can alleviate confusion and the miscarriage of your intentions.
When should I update my beneficiaries?
Update your beneficiaries when you go through a significant life event. These events can include:
- Birth and/or adoption of a child
- Death of a beneficiary
- Reconciliation or estrangement
- Job changes
It can also be prudent to check your beneficiary designations to determine if there have been any plan administrator mistakes. Further, if your wishes change in regard to the beneficiaries you have designated, they will of course require updating.
Where should I update them?
Your estate plan is a good place to start when it comes to updating beneficiaries. Depending on your needs and situation, you might need to make an addendum or create a new will. Meeting with your attorney can ensure the changes you make are valid and enforceable.
However, you must also update beneficiaries in places other than your will. You will also want to review change forms for:
- Retirement accounts
- Savings accounts
- Checking accounts
- Life insurance accounts
The process for changing beneficiaries is typically easy and straightforward. Often, it entails little more than filling out a form online with the plan administrator, banking institution, or employer.
Why should I update them?
One last question we should answer is why it is so important to update beneficiaries. While it may seem like a small detail that can easily slip your mind, beneficiary designations can have a tremendous impact on others.
People you no longer want to receive benefits (e.g., your ex-spouse) can ultimately wind up with them, while those whom you intend to receive your property could wind up with nothing. Further, your loved ones could get stuck fighting in court for what they feel is fair, rather than being able to rely on accurate, updated legal documents.
Now that you know how to update your beneficiaries and why it is so crucial, taking this step can give you and your loved ones valuable peace of mind.