So, let’s make this simple, fast, and easy with a once-a-year three-step plan to ensure your money goes to the people and organizations you care deeply about.
Here’s how to do this well.
1. Review Your Life Events
Since your last review, have you had any of the following “life events?”
These are in order—those listed first are usually a strong reason to update some or all your beneficiaries. Those at the tail end of the list may be less likely to prompt a change but are still worth thinking through.
- Birth of a child
- Death of a beneficiary
- Illness or incapacitation of a beneficiary
- Child turned 18
- New Job
- Change in a company’s retirement plan or pension plan
- Establishment of a trust
- New insurance policy
- Recently retired
- Bought or sold a major real estate property or business
- Moved to a different state
- Birth of a grandchild
- The marriage of an adult child
- The divorce of an adult child
- Changes in health or health of your spouse
- Change in job status or income
If none of these life events occurred recently, you’re probably all set.
However, if one of these events happened to you, or if running through this list prompted you to want to make an update, then you should consider the next step.
2. Cross-check your Assets
Which of the following comprehensive list of financial accounts and ownership interests may need to be updated?
- Traditional IRA / Rollover IRA / Roth IRA
- SEP IRA / SIMPLE IRA / Keogh
- 401K / 403b / 457 / Deferred Compensation Plan
- 529 Plan / Coverdell Education Savings Account (ESA) / UTMA / UGMA
- Life insurance (Personally Owned / Group Term / Voluntary Term)
- Health Savings Account (HSA)
- Transfer On Death (TOD) bank or investment account
3. Contact the right parties to update your beneficiary designations
Financial planners, estate planning attorneys, and CPAs are great resources if you have any questions about how beneficiary designations work and how yours should be structured given your long-term goals and unique situation. And don’t forget to consider both your primary and secondary beneficiaries when making these crucial decisions.