It’s important to care for your loved ones’ future, and updating beneficiaries helps. As life changes, review life insurance, retirement accounts, and assets to ensure they go to the right people. This simple task is often forgotten, but it can make a big difference in making sure your plans are followed.
Key Takeaways
- Who Can Change Beneficiaries? Only the policyholder, account holder, or asset owner can update beneficiaries.
- Why Update? Major life events like marriage, divorce, and children’s birth often require updates to beneficiaries to reflect your current intentions.
- How to Update? Updates can usually be made directly with your insurance company, retirement plan administrator, or other asset holders by filling out a form or providing written instructions.
- Important Considerations: It’s important to update beneficiaries regularly, especially after life-changing events. Ensure that beneficiary designations align with your will and overall estate plan.
Who Can Change Beneficiaries?
The ability to change beneficiaries is typically reserved for the account holder or asset owner. This means that the person who owns the policy, retirement account, or other financial asset has the legal right to designate or update the beneficiaries.
- Life Insurance Policies: The policyholder (who owns the insurance policy) can update beneficiaries at any time, typically by submitting a change-of-beneficiary form to the insurance provider.
- Retirement Accounts: For 401(k)s, IRAs, and other retirement accounts, the account holder can change the beneficiary designation through their plan administrator or financial institution.
- Other Assets: For assets like bank accounts, real estate, and trust funds, the owner can designate or update beneficiaries through the appropriate channels (such as a will, payable-on-death (POD), or transfer-on-death (TOD) designation).
In short, you cannot change the beneficiaries unless you are the account holder or owner of the asset.
How to Update Your Beneficiaries
Updating your beneficiaries is generally a straightforward process, but the exact steps may vary depending on the type of asset or account involved. Here’s a breakdown of how to update beneficiaries for different types of accounts:
1. Life Insurance Policies
Changing beneficiaries on your life insurance policy is a relatively easy task. Here’s how you can do it:
- Contact Your Insurance Provider: Contact the insurance company that holds your policy. They may have a specific form that you need to complete to change your beneficiaries.
- Fill Out the Form: You will need to give the new beneficiary’s name, contact details, and their relationship to you.
You may also need to specify whether the beneficiary is primary or contingent (secondary) if the beneficiary passes away. - Submit the Form: Return the completed form to your insurance company by mail or electronically (depending on their submission process).
- Get Confirmation: Once the insurance company processes your change, make sure to receive a confirmation, either in writing or via email, that your beneficiary designation has been updated.
2. Retirement Accounts (401(k), IRAs, etc.)
Updating the beneficiaries for your retirement accounts can usually be done by contacting your plan administrator. Follow these steps:
- Log Into Your Account: Many retirement account providers offer online access to update beneficiaries. If you need help making changes online, call the customer service number.
- Locate the Beneficiary Designation Section: Once logged in, navigate to the section where beneficiary designations are listed. You may be able to change your beneficiaries online.
- Make the Change: If the system allows, update your beneficiary information. If you’re changing more than one beneficiary, you’ll typically need to specify the percentage each beneficiary will receive.
- Confirm the Update: After submitting the changes, request a confirmation statement or an updated plan summary that reflects the new beneficiary designations.
3. Other Financial Assets (Bank Accounts, Real Estate, etc.)
For certain assets like bank accounts, real estate, and investment portfolios, the process may vary:
- Bank Accounts: If your bank account has a payable-on-death (POD) designation, you can update it by visiting the bank and completing a POD beneficiary form.
- Real Estate: If you own real estate and want to ensure it passes to a designated beneficiary, consider creating a transfer-on-death (TOD) deed in states where this is allowed. You can work with an attorney or use a specific online service.
- Trust Funds: If assets are in a trust, update the beneficiaries through the trustee or by modifying the trust documents if necessary.
Remember, it’s crucial to check with each institution to understand their specific processes for changing beneficiaries, as the steps may vary slightly between providers.
Why You Should Update Your Beneficiaries Regularly
One of the most important aspects of estate planning is ensuring that your assets go to the right people. Here’s why updating your beneficiaries is essential:
1. Life Changes Happen: Major life events—such as marriage, divorce, the birth of a child, or the passing of a loved one—can impact who you want to designate as your beneficiary. If you don’t update your beneficiaries after such events, your assets may go to someone you no longer wish to benefit.
2. To Avoid Legal Complications: Failure to update your beneficiary designations after a divorce can lead to legal complications and delays in the distribution of your assets. For instance, an ex-spouse could inherit from your life insurance policy or retirement account if you fail to update the beneficiary designation.
3. To Reflect Your Current Wishes: Beneficiary designations often take precedence over a will. If you want your assets to go to specific people or entities, you must ensure your beneficiary designations are current and aligned with your overall estate plan.
4. To Ensure the Right Distribution: Updating beneficiaries ensures that the correct people receive your assets. It also allows you to control the percentage of assets each beneficiary will receive. Without updates, someone you didn’t intend to obtain anything may end up with a portion of your estate, or someone you want to inherit may be left out entirely.
Frequently Asked Questions (FAQ)
Q: Do I need to update my beneficiaries if I change my will?
A: Yes, updating your beneficiaries is important even if you change your will. Beneficiary designations on accounts like life insurance policies and retirement plans override provisions in a will, so keeping your will and beneficiary designations consistent is essential.
Q: Can I name more than one beneficiary?
A: You can typically name multiple primary or contingent beneficiaries. You will usually have to specify what percentage of the assets each beneficiary will receive.
Q: What happens if I don’t update my beneficiaries after a divorce?
A: In many states, if you don’t update your beneficiaries after a divorce, your ex-spouse may still be listed as a beneficiary on your life insurance policy, retirement accounts, or other assets. In some cases, divorce courts may even order the removal of an ex-spouse from your accounts, but it’s always best to proactively update your beneficiary designations.
Q: Can I designate a charity as my beneficiary?
A: You can designate a charity as a beneficiary for your life insurance policy, retirement account, or other financial accounts. This can be a great way to leave a lasting legacy.
Conclusion:
Updating beneficiaries may not be the most exciting task, but it’s one of the most important steps to ensure that your assets are passed on to the right people. Whether it’s a life insurance policy, a retirement account, or other financial assets, it’s essential to regularly review and update your beneficiary designations—especially after significant life changes.
By keeping your beneficiaries up-to-date, you help ensure that your wishes are carried out and provide peace of mind to your loved ones during an already difficult time. Taking the time to make these changes today can make all the difference tomorrow.
If you haven’t yet reviewed your beneficiary designations, now is the perfect time. It’s a crucial step to ensure your legacy is passed on exactly as you intend.
Your Trusted Paducah Divorce Lawyer – Start Today
When it comes to protecting your family and your future, having the right legal advocate makes all the difference. Our Paducah-based divorce lawyers are committed to delivering compassionate and effective representation.
Call (270) 201-7776 now or request your consultation online.
