by Martin Federici, Jr.
There are numerous life events that can make us reconsider who we want to leave money to in our 401(k)s, IRAs, 403(b)s, annuities, life insurance policies, brokerage accounts, etc. Unfortunately beneficiaries can pass away too soon (death); sometimes beneficiaries are no longer spouses (divorce); sometimes there’s a new additional to a family (birth and/or marriage), and sometimes hurt feelings may influence beneficiary changes (often not the wisest decision).
Review your Beneficiaries Often
Often these life events involve so much that people sometimes forget to review/change their beneficiary selections, and that can cause headaches down the road if they’re not addressed in a timely manner. I’ve heard too many stories re: that former couple who got divorced and one person remarried, but forgot to take the former spouse off as a beneficiary on a life insurance policy…how do you think the current spouse feels when she watches not only her beloved husband pass away, but also watches the ex-wife get the life insurance proceeds? According to PA law, there’s nothing that the current spouse can do in that situation (and it could’ve been avoided with a simple beneficiary review).
Instead of forgetting to make these important changes shortly after they occur, make sure to be proactive and update your beneficiaries as soon as possible on all applicable accounts. If you work with a qualified financial advisor and/or professional insurance agent, hopefully he/she is aware enough to make beneficiary updates an important part of the customer review process (so you’re up to date and avoid issues). If your advisors reach out to you proactively to prepare the beneficiary update paperwork in a timely fashion, your advisors are doing the right thing for your situation.
Timely Beneficiary Updates Will Help your Loved Ones
It’s the little things like making sure your beneficiaries are accurate that can make a huge financial difference in your life, so why leave it to chance? Get it done now; make a list of all applicable accounts (or your advisor can do that for you), and make the necessary beneficiary changes (don’t forget to update your will, living will, POA, and health care directive as well) – you’ll be glad that you did (and so will your loved ones).
Find an experienced financial advisor who reviews beneficiary selections during life events, works for an RIA firm, earns his/her money from fees (NOT commissions), believes in having an abundance of investment choices for clients, and has the heart & demeanor of a teacher, NOT a salesperson, and chances are you’ve found the right financial advisor to help you prepare and plan for your goals.
To learn more about Martin Federici, view his Paladin Registry research report.
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