When you raise a glass of champagne to ring in the New Year, you probably won’t be thinking about the beneficiary designations on your 401(k), IRAs or life insurance policies. But now is a good time to reevaluate those designations, while you are in the process of reevaluating your life and making resolutions.
Having the wrong beneficiary designated on these and other things like bank accounts, annuities and 529 college savings plans is one of the most common, and costly, estate planning mistakes people make. This happens easily because most people name those beneficiaries when they initiate a plan or open an account and then never think about them again.
However, life happens and things change; this is why you need to review and update your beneficiary designations at least once a year, and New Years is a good annual reminder for you.
Here are six scenarios that could cause a change in beneficiary designation:
- You got married, divorced or remarried
- You changed jobs and moved your retirement account
- One of your beneficiaries died
- The birth of a child or grandchild
- You moved your account to another financial institution
- One of your beneficiaries became disabled
- You changed your mind
Having the wrong beneficiary designated (or designating a minor) can wreak havoc on your family when something happens to you and it can create tax issues for your heirs, as well. You could unintentionally disinherit the very people you care the most about and potentially tie up your estate in probate – or worse – litigation.
Enjoy your New Year’s celebration, and after the party is over, make it a point to review your beneficiary designations and update, if necessary.
If you don’t already have an estate plan – or have one that needs to be reviewed and updated – make this the year you get this done. Call us at (612) 206-3701 or fill out our contact form to set up an appointment.
Image courtesy of Rosen Georgiev/ FreeDigitalPhotos.net