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Importance of Beneficiary Designations

by Michele Malloy

Why does it matter? Many people think that having a Will takes care of everything for your family. Having a Will is extremely important, and will save your family both time and money after your death, but it does not cover everything. Beneficiary Designations are absolutely critical for the following financial matters:

  1. IRA and Roth IRA
  2. 401(k)
  3. Insurance
  4. Annuities

For each of these items, whatever you put down on the Beneficiary Designation will determine where the money of that asset goes. Unfortunately, many people fill oot the Beneficiary Designation when they open the IRA, annuity, etc., but never think to go back and revisit it later. Your designated beneficiary may no longer be alive, there may have been a divorce or falling out, or perhaps some other family member now has a greater need.

What do I need to do? Call each institution holding one of the listed assets for you and ask them to send you a Change in Beneficiary Designation form. Sometimes you can handle this by email; other institutions require a physical copy to be filled out and filed with them. When you receive the form, fill it out carefully and completely, keep a copy, and send it in. If you have a substantial estate, discuss with your accountant and your estate planning attorney the best way to take care of your beneficiaries on these forms.


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