What Are Beneficiary Designations?
When initially completing paperwork for investment accounts like IRAs, qualified plans through work, or life insurance policies, you are asked to provide the names of your beneficiaries. By completing beneficiary designations, you enable a spouse, child or even a charity to receive your assets when you pass away. The designation allows you to avoid probate and send the asset directly to the individual.
Review Beneficiary Designations Annually
While we may not want to think about it, it’s important to direct where our money goes after our death. We recommend reviewing and updating beneficiary designations annually. And December is a good month to review them, just before the new year.
It’s easy to overlook updating beneficiary designations – it’s even happened to Michael Joyce himself. He shared the following with Rachel DePompa, “A couple of years ago, when my youngest son was about 12 or 13 and I was reviewing the beneficiary designations on one of my Roth IRAs, I realized that he was not listed as a contingent beneficiary,” said Joyce.
Joyce says you can name a percentage of your assets for multiple people as long as it adds up to 100 percent. To name a person as a beneficiary, you need their full name and date of birth. Some institutions require a social security number.
Life Events that Should Trigger a Review
Other life events that should trigger a review of your beneficiary designations are marriage, divorce, having a child or the death of a loved one.