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Beneficiary Bonanza?

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Unless you keep your beneficiary information updated, the bonanza might go to the wrong person!

I am constantly hearing horrific stories of assets not flowing as intended by the deceased, so pay attention.  If you have named beneficiaries, and then experienced a ‘life event’, there could be big surprises down the road.

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To put it simply, a beneficiary is a person or organization who will benefit if you die.  The beneficiary is determined by you for each asset that you own.  If you fail to name a beneficiary

•  your state has laws that determine what happens to things like your investments, house, car–potentially any type of physical or intangible property that you own. 

•  they take their little chunk through the probate process.

Here are a few common ways for money and property to go astray.

  1. Job Change and a Move.

We recently received a 401k mailing from my son’s former employer.  He doesn’t live here anymore.  Lucky for him, we still do.  Countless people leave 401k accounts behind when they change jobs, especially when they relocate as well.  There may be a good reason to leave money with a former employer, but you must keep the company abreast of your address and email.  It is also a very good practice to keep a list somewhere of these investments, and the beneficiary of each one.  Lost 401k’s eventually become unclaimed property of the state.

  1. Divorce

It is also far more common than you might think for divorced spouses to still have each other named as beneficiaries on any number of assets.  This is fine if it is your intention, but usually it happens out of negligence.  Things get forgotten.  Then one day, instead of your kids getting your timeshare in Hawaii, or your 401k, the bonanza goes to your ex-spouse!

  1. Corporate Buyouts, Mergers, and Software Changes

My father retired from Dupont.  In the process of tracking down and documenting his assets, I found that my mother was listed on his retirement account as ‘Not a beneficiary’!  Nor were there any contingent, or secondary, beneficiaries listed.   We have paperwork showing otherwise, but in his online account, the information was incorrect.  His funds might have had to go through probate before going to family.  The company has gone through many changes since he left, and somewhere along the line his beneficiary information was reset.

These are just a few examples of how money can go astray.  Birth, death and inheritance are some other triggers for a need to review your beneficiary information.  Keep a list of assets so you don’t miss anything when these events occur.  Your heirs will be forever grateful.

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