From the Desk: Your Beneficiary Form Might Be Living in the Past

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Quick question: if something happened to you tomorrow, who would inherit your 401(k)?

If you answered without hesitating, great. Now the follow-up: are you sure that's what the paperwork says?

For a lot of people, the beneficiary form was filled out on day one, somewhere between the direct deposit form and the parking pass application. Signed, filed, never seen again. At the time, every name on it made perfect sense. But that form doesn't know about the wedding, the divorce, the new grandbaby or the college roommate you haven't spoken to since 1998.

The Form That Outranks Your Will

Here's the part that surprises people: beneficiary designations generally take precedence over the instructions in your will. You could have a beautifully drafted estate plan sitting in a binder and a decade-old form quietly sending your IRA somewhere else entirely. In most cases, the form wins.

And it's not just retirement accounts. Life insurance policies, annuities, plus many bank and brokerage accounts can carry beneficiary designations too, often called "payable on death" (POD) or "transfer on death" (TOD). That checking or savings account you opened years ago? It's worth a look as well.

Life Happens – Forms Don't Update Themselves

Marriage, divorce, the birth of children or grandchildren, the loss of a loved one, a shift in your financial picture, or changes to your estate plan can all mean your beneficiary choices no longer reflect what you want. Any one of them is a good reason to take a fresh look.

Your Beneficiary Checkup

1. Who's on first? Are your primary and contingent beneficiaries still the people you'd choose today?
2. What's changed? Have there been major life events since you signed?
3. Do the numbers add up? Are the percentages accurate and clearly stated?
4. Is everyone still with us? Have any named beneficiaries passed away?
5. Does it match the master plan? Do your designations line up with your overall estate plan?
6. Any minors on the list? Naming children directly can create complications worth talking through.

Small Form, Big Impact

Beneficiary forms are about as exciting as a dentist appointment, which is exactly why we put them off. But a quick review can help ensure your assets go where you intend, and it can spare the people you love confusion, delays or outcomes nobody wanted.

Think of it as a small favor to your future family.

Not sure what your forms say? That's what we're here for. Bring it up at your next meeting and we'll take a look together.

Next Up: Not All Assets Are Created Equal

When it comes to heirs and charity, some assets carry more tax baggage than others. Next month, we'll look at how different types of accounts are taxed when inherited and why the assets you choose for charitable gifts can make a real difference. Stay tuned.

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