When’s the last time you took a look at who you’ve listed as your beneficiaries on your plan or IRA? If you’re like most folks we see, it’s probably been a while. And that could be a huge mistake.
We’ve seen a wide variety of mistakes FRS Special Risk participants have made when it comes to listing a beneficiary on their deferred comp plan, their FRS Investment plan, or even their own personal IRAs. One of those is simply not listing a person as their beneficiary and diverting the funds to their estate if they were to die. Now it’s subject to probate, additional costs, and potentially family feuds on who should get the money, especially if the estate planning isn’t clear.
Another common mistake we see is naming their personal revocable trust as their beneficiary. Where there might be a good reason to do so, the reality is, in most cases it’s not a good idea.
Another mistake we run into more often than you’d think is when a person names their son or daughter or any person, for that matter, as a beneficiary and that person has special needs. For example, they are disabled and receiving Social Security benefits as a disabled person. Naming that person as a beneficiary could be disastrous for their continued benefits, and other options should probably be explored.
Here's one that actually happens from time to time. A couple gets divorced, and someone forgets to change their beneficiary. Oops. Probably a good thing they aren’t around anymore to have to explain that one to the new spouse! Truth is, there are cases where that one has been reversed after the fact, but at the very least it’s an expensive and time-consuming process that nobody would want to go through.
So if it’s been a while, take a look at who’s listed as your beneficiary on your accounts. It only takes a few minutes and could be a big difference-maker. And not sure about something? Give us a call and we’d be glad to talk with you about it.
Schedule a complimentary consultation with a fee-only financial planner to discuss your personal situation in more detail.