As life changes your goals may change. Beneficiary designations are powerful and should reflect your values. It is best to review these annually with your financial planner to ensure your assets are distributed as you wish and to reduce time, money, and stress.
Here are five things to consider when reviewing your beneficiary designations.
Revocable vs. Irrevocable Beneficiaries
Understanding the implications of each designation type is important. The most common type of beneficiary is a revocable beneficiary, meaning that the account owner has the flexibility to rename those listed as frequently as he/she wishes. Irrevocable beneficiaries are more permanent in nature; the account owner cannot rename without the current beneficiary consenting to this change.
Relationship Dynamics and Primary/Secondary Beneficiaries
Life events such as birth, marriage, divorce, and even the loss of a loved one can all significantly alter your priorities. Recognizing the need to update beneficiaries based on changes in relationships or family structure ensures designations are aligned with current life circumstances.
Additionally, ensuring that both primary and secondary beneficiaries are listed is important.
Primary beneficiaries are designated to receive an asset first. Secondary, or contingent beneficiaries are designated to receive an asset if the primary beneficiary passes away before you do, or else disclaims (refuses to inherit) the asset. It is best to get detailed; list percentages designated to each beneficiary and how you would like the assets to be distributed.
Financial Position Changes
Your assets today are most likely not the same as they were five or ten years ago or what they will be in five or ten years from now. Major financial events such as inheritance, sale of a business, or job changes should prompt reassessment.
Beneficiary Alignment with Will or Trust Intentions
Beneficiary designations on your accounts override intentions stated in your Will. A Will is subject to interpretation by probate court and in some extraordinarily contentious situations, can be contested by family members. By naming beneficiaries, you are utilizing a powerful tool, so it is important to ensure there is consistency between the two. You can also avoid probate by building a trust. Ensuring that both documents reflect your intentions helps avoid potential conflict and ensures your wishes are executed smoothly.
Executor Communication with Beneficiaries
Providing your executor with contact information for beneficiaries streamlines the asset distribution process after your passing. This proactive step reduces the burden on your executor and facilitates efficient communication during estate proceedings.
Here at BentOak Capital, we understand that naming or un-naming beneficiaries can be difficult. We put emphasis on alignment with person values when reviewing your designations to promote clarity and confidence knowing that your wishes will be fulfilled.
Please remember to contact BentOak Capital (“BentOak”), in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you want to impose, add, to modify any reasonable restrictions to our investment advisory services, or if you wish to direct that BentOak to effect any specific transactions for your account. A copy of our current written disclosure Brochure discussing our advisory services and fees continues to remain available upon request or at www.bentoakcapital.com.
This information is not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
Securities offered through LPL Financial, Member: FINRA/SIPC. Investment advice offered through BentOak Capital, a registered investment advisor and separate entity from LPL Financial.
