When you signed up for life insurance, a retirement plan or a similar financial account, you likely named a beneficiary and promptly forgot about it. it’s important to periodically update your beneficiaries and make sure the right people receive your assets.
Why it Matters: The beneficiary designations for your retirement savings, life insurance and other financial accounts take precedence over your will. If you want your wishes to be followed after your death, you need to keep your beneficiaries updated. If you haven’t listed anyone as a beneficiary, your assets will follow a default order to determine who will receive it, such as your spouse, your children, your parents and then your siblings. Listing a beneficiary—and keeping it updated—will save time, effort and potential conflict after you’re gone.
Common Mistakes: If you did name someone as a beneficiary, you need to update the names whenever there’s a change in who you want to receive your assets. A few common mistakes include not adding a spouse after marriage, not adding children as they are born, leaving an ex-spouse named after a divorce and leaving parents and siblings listed after you married and started your own family.
When to Update: Whenever you experience a life change, review your beneficiary designations and make any necessary changes. You should also update your accounts when a beneficiary changes his or her name, such as an adult child getting married. If you’re not sure how to change your beneficiary, check with your human resources department, life insurance carrier or financial institution.