Beneficiary Review

We’re two weeks into the new year and many of us have already broken our New Year’s resolutions. “The spirit is willing but the flesh is weak” is a statement that dates back hundreds of years and aptly describes our human condition. One annual resolution that should be much easier to keep however, is an annual review of our designated account beneficiaries. According to Wikipedia, “a beneficiary in the broadest sense is a natural person or other legal entity who receives money or other benefits from a benefactor.”

In the world of finance, that benefactor is the legal owner of certain types of financial accounts. Retirement accounts such as 401k’s, 403b’s, traditional IRA’s and Roth IRA’s all have contractual terms that allow us to name specific beneficiaries. Likewise, owners of annuity and life insurance policies should designate beneficiaries. In many states (including Colorado), retail brokerage and bank accounts are permitted to offer a Transfer on Death provision which will function similarly. Those who have pensions should also investigate possible beneficiary options as well.

Our New Year’s resolution suggestion is to review all of your designated beneficiaries at least annually and whenever a major life event such as birth, death, marriage and/or divorce occurs. Likewise, account owners should be sure to name both primary and contingent beneficiaries. Doing so can prevent lengthy and expensive court proceedings and assure that a decedent’s assets are distributed in line with their wishes.           

If you would like to learn more about these and other wise financial planning moves, please contact us through our Level 5 Financial LLC website or via phone at 719-323-1240. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.