Naming Your Beneficiaries Can Make A Big Difference

Personal Banking

March 17, 2016

Finding the correct balance of insurance, retirement savings, and other assets will help you and your family reach long term financial goals.  It is your job as an investor to find this correct mix and control as much of the outcome as possible.

Finding the balance is only half of the journey.  Naming the beneficiaries is a crucial part of long term planning.  A beneficiary is the person you name that will inherit the proceeds of the policies and other assets.

Three Points To Consider When Naming Beneficiaries

Name Both Primary and Contingent Beneficiaries – It is a good policy to name a contingent beneficiary in the case that the primary beneficiary would die before you.

Minors as Beneficiaries – in some cases minors would not be able to look after or take over those assets without supervision.  This can add an additional expense for the beneficiary.

Be Aware Of The Taxes On The Asset – Each asset can have a different tax implication on the beneficiary.  It is important to talk with a tax advisor while in the estate planning process to fully understand how the taxes could affect the beneficiary.

Three Common Mistakes when Naming Beneficiaries

Forgetting to Update Beneficiaries – just like it is important to review current policies and financial performance, it is also important to review the beneficiaries.  Common mistakes can include incorrect addressees or contact information, listing a parent or relative who is deceased, or listing a guardian of a child who is no longer a minor.

Assuming A Will Covers Everything – In some cases, if no beneficiary is named the account could go directly to the estate instead of to the desired party.  The will and the account could operate independently and it is important to discuss these accounts during the estate planning process.

Not Telling Someone They Are the Beneficiary – This situation occurs more often then it seems.  Discussing death is never comfortable, but it is important that the beneficiary knows about the policy, the approximate value of the policy, and who to contact in the event of a sudden death.

For more information on naming beneficiaries call your local branch.  Click here to find the address and telephone number of your local branch.