Why Updating Your Beneficiaries is Important
Whether you’re just starting out with your first IRA or transitioning into— or already enjoying — retirement, periodically reviewing who you’ve named as the beneficiaries on your financial accounts can help you avoid unintended consequences for your loved ones.
Why beneficiaries matter
For example, when you first set up your retirement account(s), you’re typically asked to name one or more beneficiaries on the account. Because setting up an account is a “one-time thing,” it’s likely you haven’t thought about it since.
But, as you move through your life, the people you chose when you first set up your retirement and other savings and investment accounts, may not be who you would name today. Some, like an ex-spouse for instance, may no longer be part of your life. A charitable organization that was important to you years ago may no longer exist, or now that you have children, you may want to include them as primary beneficiaries instead of a sibling. If left uncorrected, having outdated beneficiaries named on your account can undermine your final intentions for your financial assets.
IRAs need additional considerations
When it comes to naming or choosing not to name a spouse as your beneficiary, different rules can apply. Some state laws, for instance, may require written spousal consent if an IRA’s owner names anyone other than, or in addition to, their spouse as their primary beneficiary. Though you can have as many beneficiaries as you want on the account — primary and contingent — you may need your spouse’s consent to do so.
Federal law also treats spouses and other beneficiaries differently, and those rules change periodically.
When it comes to transferring wealth, it’s important that who you want to receive your money receives it and with minimal delays. By having the correct beneficiaries on your retirement accounts, you typically can avoid probate — the court procedure of settling the estate of a deceased person — which can be time consuming and expensive. And you’ll be confident that your funds will end up in the hands of the people you intended.
Consider consulting with your legal or financial advisor to help you with your beneficiary decisions. To update your beneficiaries on a Millennium Trust account, fill out a Beneficiary Designation Form.
The material in this Blog is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Millennium Trust Company performs the duties of a directed custodian, and as such does not offer or sell investments or provide investment, legal, or tax advice.