Many people make the biggest estate planning mistake there is — without even knowing it.
They forget to update the names of their beneficiaries for employer-sponsored retirement plans, IRAs, insurance policies, mutual funds, bank accounts and annuities.
If you haven’t updated your beneficiaries, when you pass away, your assets could go to the wrong people — perhaps an ex-spouse, for example, even if your will says otherwise.
Most people name beneficiaries when they first buy insurance or sign up for a retirement plan. But things may have changed since then.
That’s why it is wise to review your list of beneficiaries, according to an article on marketwatch.com.
Some advisors also suggest naming secondary beneficiaries in case something happens to your primary ones. Otherwise, if your primary beneficiary dies before you do, your assets could go to probate, a costly and time consuming process.
Reasons to name update beneficiaries include getting divorced or remarried; changing jobs and rolling over your retirement money into an IRA; death of a primary beneficiary; your bank changed ownership; having a child; or your beneficiary became disabled (a windfall could jeopardize the beneficiary’s disability benefits.
The article suggests reviewing your beneficiaries every year, usually around tax time when you get statements from all your financial institutions with their contact information on them.
