Who gets your stuff when you die?
Can you remember who you listed as beneficiary on all your different accounts?
Maybe you think you know, but you should review your beneficiary designations on all applicable accounts. That includes banks, brokerage accounts, life insurance, 401(k)s, pensions and a whole slew of assets.
Some of these accounts were set up many years ago, and circumstances could have changed.
My suggestion would be to take a look at these every time a life event takes place. Life events could be a new baby, marriage, divorce, retirement or a job change just to name a few.
Here are some reasons why naming and updating your beneficiaries is so important:
Beneficiaries designate who gets what.
It's really very simple. You are reaching out from the grave to let everyone know who gets what. Naming beneficiaries is something a lot of people take for granted. Most of the time we scrawl our spouse and children on the lines available. This is where you decide who gets what, and exactly how much.
It allows you to to divide money equally or unequally.
Ah, here's an interesting feature. Believe it or not, you can actually divide the money any way you want! You don't have to go say 50/50. If you like, you can give a larger percentage to one person or entity than an another. So if Uncle Joe is your favorite, give him a bigger piece of the financial pie.
Naming beneficiaries avoids probate.
When you record your beneficiaries on various financial and personal assets, it is considered a contract. In fact, these beneficiary designations supersede your will. So if you name your Aunt Bea to get your stocks and bonds in your will, and your nephew is named as beneficiary when you opened the account, too bad. Sorry Aunt Bea.
Beneficiaries allow you to have a "Plan B".
When you fill out your beneficiary designations on various accounts, have you ever noticed the next section that says "contingent beneficiaries"? That, my friend, is your "Plan B." If for some reason one of your primary beneficiaries predeceases you, then your contingent beneficiaries get their share.
Make sure you think through who you name as beneficiaries. Plus, review them from time to time, especially if you have a new spouse or child, or there is a death in the family. It will eliminate a whole lot of confusion later.
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