At this time of year, when you are thinking about taxes and money issues, it is also a natural time to review your choices of beneficiaries. A beneficiary is the person, organization, charity, etc. that you designate to receive your money after you die.
You can also name contingent beneficiaries, which act like backups if the beneficiary happens to die before you do. (This is not the same as an inheritance where a will may be involved.)
Whomever you designate as the beneficiary gets the money no matter what a will says. Therefore, if there is a change in your wishes, you need to change your beneficiary to reflect those wishes.
Some of the more common reasons for a change are births, deaths, marriages and divorces. Do you really want your ex-spouse to get your retirement account instead of your current spouse? This can happen if you do not update your beneficiaries.
What assets requires or allows you to designate a beneficiary?
Some of the more common assets are:
- retirement accounts such as a 401k, 403b, 457, TSP, IRAs
- some pensions
- some annuities
- brokerage and bank accounts not jointly owned
- insurance policies
So double check your accounts and policies, especially if you have an old retirement account from a previous job which you haven’t looked at lately.
It is a good idea to check these annually or when a major life change occurs.
Please email us at firstname.lastname@example.org or call our office at 703-956-6662 if you have any questions.