By Donna M. Cheswick
Investment accounts that allow for designated beneficiaries are one of the easiest and direct ways to pass assets to your loved ones upon your death, but this only works if the information is current and up-to-date.
We all live busy lives, sometime there are not enough hours in a day to accomplish everything we want to get done. There are always things we mean to attend to, but figure we’ll get to them eventually.
One of the things that should take higher priority is making sure the beneficiary information on your investment accounts is periodically updated. This is especially important when you have a major change in your personal circumstances such as a marriage, divorce, birth of a child, adoption or death of a spouse or other close relative.
When beneficiary designations are outdated or ignored it can cause many difficulties for those nearest and dearest to you. The law very clearly states that assets in these types of accounts must revert to the person(s) or institution(s) named on the account agreement. What happens when there is only a single beneficiary on an account and that person is dead?
Upon your death this would cause the assets to revert to your estate and could be subject to probate and unnecessary taxation. What happens if you have named your children as beneficiaries, but forgot to update the document to include those born or adopted after the initial designation? This would cause you to unintentionally disinherit that child. What happens if you have been divorced and remarry but neglect to change your beneficiary to your current spouse? Upon your death the assets would pass to your ex-spouse.
The accounts that have beneficiary designations on them may be more abundant than you realize. Included would be employer retirement plans, annuity contracts, life insurance policies, and IRA accounts, as well as, transfer or payable on death titled accounts. Take a few minutes to review the primary beneficiary(ies) on all your accounts. Make sure to also consider naming contingent beneficiary(ies). These would be the individuals who will receive your assets if your primary beneficiary(ies) is/are not available, either because they have predeceased you or because they wish to disclaim part or all of your account.
For your own peace of mind and the well-being of your family add updating your beneficiary information to your to-do list and take a few minutes to protect your assets for the ones you love.
About Donna Cheswick
Donna M. Cheswick has more than 20 years experience in the financial services industry providing individual and corporate clients with personalized service and professional planning advice to help them grow, preserve and protect their investment portfolio as well as achieve their financial goals.
In addition, as a Certified Divorce Financial Analyst, Donna assists individuals and their attorneys to have a clear understanding of the short and long-term financial implications of various settlement proposals prior to agreeing to a settlement. Her professional training in evaluating the financial implications early in the process can help clients towards a more stable economic future and avoid the common financial pitfalls of divorce.
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Donna M. Cheswick
Financial Consultant–Certified Divorce Financial Analyst
BPU Investment Management Inc.
One Oxford Centre
301 Grant Street
Pittsburgh, PA 15219
132 S. Main Street
Greensburg, PA 15601