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Finances in 55 Seconds: Check Beneficiary Designations

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Stop watchWhen it comes to what you want done with your money after you’re gone, it’s important to consider an estate plan. Estate planning is an essential part of making sure your money goes where you want it to. Proper estate planning can limit the amount of time your estate spends in probate — and reduce the fees and taxes that are paid on what you leave behind.

Estate planning sounds daunting, but it can be broken down into smaller pieces to make it more manageable. One of the easiest estate planning activities you can do is check your beneficiaries. Indeed, this can be done in under 55 seconds:

  1. List accounts with beneficiaries: The first thing you need to do is list the accounts likely to have beneficiaries. These accounts include your life insurance policies, annuities, retirement plans, and some bank accounts. (18 seconds)
  2. Gather the paperwork: Next, gather the paperwork associated with the accounts. Hopefully you have the papers stored in a safe location that you can access fairly easily. You can also call your HR representative if you have a company retirement plan. (20 seconds)
  3. Skim the beneficiaries: You should be able to quickly look through the paperwork to find the beneficiaries. It’s information that is usually found in a section with a prominent heading. Make a note of the beneficiaries. (17 seconds)

Now, of course, it is time to figure out how to change beneficiaries. A major life change, such as marriage or divorce, or the death of one of the beneficiaries, usually means that a change needs to be made. You should find out the process for making that change, and fill out the necessary paperwork. This is extremely important because who you have listed as a beneficiary trumps what is i your will in most cases. This means that if your will states that your current husband should get the assets in an account, but the beneficiary is still your ex, it’s your ex who will get the money. Make sure that you go through all of your accounts and update beneficiary information.

Realize that you might not be able to make changes on some accounts without closing the account and opening a new account. While you are about it, you should also double check the type of bank accounts you have. Some deposit accounts don’t allow for automatically passing your assets on to survivors. This means that when you die, it goes to probate to be considered as part of your estate. Find out from your bank what sort of restrictions can limit the way your account is passed to another person. You can then make the necessary arrangements to change matters, or open a different account.

Bottom Line

You want to make sure that your money will be used according to your wishes — or at least passed on to your preferred heirs. In order to ensure that this happens, it is important that you check beneficiary information regularly to make sure that it is accurate and up to date.

(Photo: purplemattfish)

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3 Responses to “Finances in 55 Seconds: Check Beneficiary Designations”

  1. Annie says:

    It is important to check your beneficiaries especially if you have a life changing event i.e. marriage, divorce or new baby. Don’t just change beneficiaries at work but also IRA’s, 401K’s, Life Insurance etc.. You should check them annually.

  2. Shirley says:

    Thanks, Miranda.
    I am about to make my first list of accounts with beneficiaries. I thought my records were complete for dealing with any eventuality, including my own incapacitation, but a list of beneficiaries never crossed my mind. It’s a good day if I’ve learned something new.

  3. skylog says:

    this is such an important thing that so many people tend to overlook. i would venture that there is a large number of people with accounts that can have beneficiaries that are not even aware that this is something they can do.


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