I made a pretty bad estate planning mistake so learn from me and don’t make it yourself.
When my kids were little—ages 2 and 4—I left my husband. As most divorcing couples do, we divided up our assets. Since our individual IRAs held similar amounts, I kept mine and he kept his. At that time, I listed my father as the beneficiary so he could take care of things since my children were minors. Then I forgot about it.
Fast forward 20 years.
My kids were grown and out of college when I moved that old IRA account to a new investment company. Guess who the beneficiary was? My elderly father, who’d remarried after my mother passed away. Needless to say, my financial situation had changed drastically, but I’d never updated my beneficiaries. If I’d passed away before making a change, it could have been a disaster for my family.
I’d always made sure that all my clients had the right beneficiaries for their accounts. But when I got home from work, the last thing I wanted to do was look at my own. If I can get it wrong, when I do this for a living, your accounts might have an error, too. It’s worth checking!
Check the beneficiaries on your accounts every year.
When you name a beneficiary to an account, the funds go straight to that person when you pass away, rather than having to go through a probate process, which makes it harder for someone to dispute. It’s much easier to name the correct beneficiary now than to have your heirs try to figure it out later.
Name a charity as your beneficiary.
You can also leave your money to charity, if you like. Simply name the charity as your beneficiary. Contact the charity for directions and to find out any restrictions they may have (such as a spousal consent form).
Changing a beneficiary is an easy thing to do now.
Double-checking your beneficiaries is an easy thing to do. All you need to do is have your account information available and call the customer service department for your retirement investment accounts, insurance policies or any other account that has a beneficiary.
If a change is needed, the company might need their social security number and to get the change in writing and may need a signature from your spouse (if choosing someone other than your spouse as a beneficiary.) They may send you a “change of beneficiary” form to sign on paper or online.
Sometimes you think you are all buttoned up when you really aren’t. Make sure your money will go to who you want it to go to today—not 20 years ago.