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Part of Your Financial Plan: Remember to Update Your Beneficiaries!

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Here’s a question: if you’ve made it clear in your will which one of your heirs should inherit money from your estate, how it is possible those funds will end up going to someone else?

The answer is simple: if you’ve forgotten to update the beneficiary information on a life insurance policy, retirement plan, or other financial instrument. It sounds absolutely basic, but, as an article published earlier this year in USA Today puts it, “Your ex could get rich if you don’t update your beneficiaries.” We suggest you click here to read this helpful piece.

As the article states, when it comes to keeping their estate plan current, most people think first about what goes into their Last Will and Testament. But they often neglect something even more obvious by failing to make sure their beneficiary designations are up to date. And here’s something you may not have known: beneficiary designations on a 401(k) or IRA are legally binding. As a result, states the USA Today article, they “often take precedence over wishes you’ve put in your will. And that can result in some unpleasant situations if your beneficiary information isn’t updated.”

The article goes on to quote a Dallas financial analyst, Charles Sizemore, who points out a scenario that’s fairly common: an employee establishes a retirement plan and fills out the beneficiary designation form on the first day of a new job. He or she never updates the form for ten, fifteen, twenty years or more, even though much has changed. Sizemore says, “Your life [today] could look a lot different. You might have divorced and remarried, or you might have kids or grandkids that weren’t around back then.” The big downside is clear: you could end up “accidentally leaving your estate to an ex-spouse or disinheriting stepchildren.” If you fail to update your beneficiaries, your financial plans might go out the window.

Here’s a list from the USA Today article of significant life events that should cause you to double check your beneficiary designation:
• Marriage or divorce
• Birth of a child or grandchild
• Death of a previous beneficiary
• When a minor beneficiary comes of legal age to inherit

Which financial products are most likely to require updates on beneficiary designation? According to USA Today, here’s a basic list:
• Retirement accounts like a 401(k) or IRA
• 529 college saving plans
• Life insurance
• Annuities with a death benefit
• Corporate profit-sharing plans
• Pension plans
• CDs, checking accounts or other bank accounts
• Some stocks, bonds or mutual funds

If you’ll contact us here at AgingOptions, we’ll gladly review some of these documents and help you make sure your wishes are absolutely clear. Protecting your assets in retirement is a key part of a sound retirement strategy – and part of that protection involves making certain your plans and desires are carried out at every stage of your life as well as after you’re gone. To accomplish this, we work with our clients to help them establish a comprehensive retirement plan called a LifePlan that carefully and thoroughly addresses all of the central issues involved in planning for a sound future: your finances, your legal affairs, your health care, your housing choices, even your family relationships. With a LifePlan in place, you and your loved ones will face the future with greater confidence and peace of mind.

The best way to begin the planning process is by attending one of our free LifePlanning Seminars, held in locations all over the Puget Sound area. You’ll gain a valuable amount of very helpful information in one highly enjoyable, fast-paced evening. Simply click on the Upcoming Events tab on this website for dates and times, or call us during the week for information and registration by phone. We’ll look forward to seeing you soon! Of course, should you wish to make an appointment for an in-person consultation, contact us. It will be a pleasure to work with you to establish a solid plan for your retirement years.

(Originally reported at

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