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New Year - Time to Review Your Beneficiaries and Make any Needed Changes

New Year - Time to Review Your Beneficiaries and Make any Needed Changes

January 10, 2022

As we all make our New Year’s resolutions, hopefully you’ve included something regarding your finances. There is almost always room for improvement, or at the very least, a review to make sure everything is still on track.

One financial task to consider is a review and update of your beneficiaries (to retirement accounts, life insurance plans, and so on). This easy guide will help you address this issue.

First, make a list. Make a quick list of all retirement plans, life insurance policies, and bank accounts. Contact the administrators to determine whether a beneficiary is needed, and whether you’re allowed to name a secondary beneficiary. Ask for the appropriate paperwork to perform any needed updates.

Then, evaluate changes in your family. Have new births occurred in the last few years? What about divorces? Has anyone passed away or become incapacitated. Are there new needs to address, such as a family member with special needs who needs long-term care?

Also, consider potential tax implications. Sometimes, distributions to beneficiaries can be taxable. Consider the impact of these taxes on your beneficiaries, and investigate the possibility of gifting some assets now or in future years.

Next, integrate your beneficiary strategy into your overall estate plan. Some distributions, such as those from life insurance, are handled outside of normal estate proceedings. When choosing beneficiaries, weigh the timing of distributions from those accounts with the more delayed actions of probate courts. Is there anyone who would need access to funds more quickly?

Modify your beneficiaries. If you’ve decided to modify your beneficiaries, contact your estate planning attorney first. Seek their feedback before making any big decisions.

And of course, remember we are also available to discuss the financial side of things. Call our office to schedule an appointment, and we can help you understand gift taxes, taxes on distributions, and other topics related to your long-term financial plan.