Beneficiary Designations

Do you know who your beneficiaries are on your life insurance policies and retirement accounts?  Are you sure?  When was the last time you confirmed the beneficiaries of record on these assets?

When you set up these assets, you designate primary and a contingent beneficiaries. Do you remember the beneficiaries you designated?

Changes occur in life and we often forget to address certain matters upon the occurrence of these changes.

For instance, a life insurance policy is taken out on a child and the child grows and takes over the premiums once they become an adult.  Mom and dad are the beneficiaries but the insured – the child – marries.  Does the insured still wish for mom and dad to be the beneficiaries?

Or let’s take this example, individual has an asset naming spouse as beneficiary.  The couple becomes estranged and divorces but the beneficiary designation does not change.  Who is the legally entitled beneficiary?

Or the primary beneficiary is the spouse with the children being the contingent beneficiaries and there is a fatal accident.  Who is the beneficiary when the primary and contingent beneficiaries are deceased?

While you may not consider any of these to be likely scenarios, it can AND does happen.  We never know what situations we will be faced with in life.

It is a good rule of thumb that every five years all beneficiary designations be verified so that if there has been a life change, it can be addressed.  You could decide to do this when your age is divisible by five or when the calendar year is divisible by five.  Whatever works for you!  But don’t let negligence determine who will benefit upon your passing.  Pay attention to the details and feel comfortable with your beneficiary designations – don’t let the law decide!

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Kay Sowa

About the Author

Kay Sowa is a paralegal in the Trusts and Estates Group at Capehart & Scatchard, P.A. She is an IRS Enrolled Agent as well as a Certified Trust and Financial Advisor. She oversees the trust and estate administration practice for the firm. She is an accomplished author and lecturer who has frequently spoken on behalf of a number of organizations including the National Business Institute and the Institute of Paralegal Education.

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