Don’t forget to check your beneficiary designations every year

Beneficiary Designation Form

Do you remember filling out the beneficiary designation form for your retirement account or life insurance?

If you are like most people, you probably don’t remember filling out this important form. You may already know that life insurance and retirement accounts are not controlled by your will or living trust, but by the beneficiary designation form that the life insurance company or retirement account custodian have on file. Common mistakes that I see with these assets are that people have no beneficiaries listed or out of date beneficiary designations. For example, if you recently married, you may still have your parents, siblings or other family members listed as the beneficiary. On the flip side, if you recently divorced, you may still have your ex-spouse listed as the beneficiary. Don’t let this happen to you! Make sure to verify your beneficiary designations at least every year. Most of the time, they can be checked online with the life insurance company or retirement account custodian. 

If you have minor or disabled beneficiaries, you should probably not list them as individuals. This is where a trust comes in handy because you can list the trust as beneficiary. A BIG word of caution though that you should typically not name your living trust as beneficiary of your retirement accounts. Naming a living trust could have negative tax consequences for the beneficiary. For minor beneficiaries, a custodian will normally allow you to name a custodian as beneficiary for the minor. This would look something like “(Custodian Name) for (Child name) until the age of (18-25) under the California Uniform Transfer to Minor’s Act”.

If you have any questions about filling out your beneficiary designation forms, please don’t hesitate to contact me. I am here to help!

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