Tips on How to Avoid Mistakes With Beneficiaries
You are likely to have a beneficiary since it is a common designation in wills, trusts, and retirement accounts. A beneficiary is an individual (or legal entity) to receive the proceeds from a financial product or vehicle when the owner passes away. What begins as a simple directive in naming a beneficiary can suddenly become complex with life changes like divorce, death, wealth accumulation, threshold qualifications for government programs, etc. Updating your beneficiaries is a part of your estate planning and financial wellness routines. However, reviewing your plans may be overlooked during emotional challenges, such as in a divorce case. Existing policies for life insurance, IRA, or an old 401(k) may still list your ex-spouse as the beneficiary. Some states now automatically terminate a former spouse’s beneficiary status when the marriage is legally dissolved, but others do not. After a Divorce If you are or plan on becoming divorced, the accumulation of wealth in