When to Change the Names of Beneficiaries on Accounts

This interesting article on Marketwatch entitled Don’t Make the No. 1 Estate Planning Goof  offers an interesting insight into making sure that you change the names of beneficiaries to accounts that are payable upon death. Examples of such accounts include most retirement accounts (401(k)s, Roth IRAs, IRAs), life insurance policies, some mutual funds, life insurance, certain bank accounts, 529 college savings accounts, and certain brokerage accounts. If you die and you have not changed the names of beneficiaries, your assets could go to people you did not intend.

In addition to naming a primary beneficiary to these accounts, many accounts also allow you to name a secondary or “back up” beneficiary in the case the primary beneficiary dies before you.

Generally, any time you face a major life change you should consider changing the names of beneficiaries to accounts. For example, upon a marriage or a divorce, a new spouse could be added as beneficiary, and an ex-spouse will generally be removed.

There are also certain situations such as if you want to make minor children a beneficiary or a disabled person receiving government assistance a beneficiary that you may need a little more than simply naming a beneficiary because you may need to open a trust for them to receive the asset.

Accounts that would not fall within probate or your revocable living trust should also be considered as part of your estate plan. Please contact Attorney Anthony Marinaccio at (818) 839-5220 to set up a free initial consultation.