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How and When to Update Your Beneficiaries

Investments
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Marriage. Birth. Death. Retirement.

Have you experienced any of these major life events recently?

If so, your current beneficiary choices — who will inherit your life insurance, pension, IRAs, etc. — may no longer be current. Take time now to review your beneficiaries. Changing beneficiary designations usually requires filling out a new form.

You will need both a primary (first choice) and a contingent beneficiary (a second choice should the primary precede you in death). Naming your spouse as beneficiary will avoid income and estate taxes. The spouse can roll over your retirement account to his or her own IRA without having to pay income taxes. However, your adult children cannot roll over your retirement plan to their IRAs.

If you don’t name a beneficiary or if the beneficiary you named has died, the asset will go into your estate, and state law will determine who receives it. The presumption is that the heirs named in your will should receive the proceeds, but this could be challenged. For example, if you name your best friend as the beneficiary, forget to change the designation when the friend dies, and you later die, your friend’s spouse or children could claim the asset.

While you are updating your beneficiary forms, look at other critical but often forgotten documents such as power of attorney, health care proxy, and safe deposit box co-signer form.

If you’d like more information about investments and retirement planning, we’re here to help. Call 866.621.1787 to speak with a consultant.

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