No Will Needed – Beneficiary Updates are Critical

family insurance umbrellaMost of your assets will never pass on through your will (assuming you have one).  IRA’s, 401k’s, life insurance and annuities all have direct beneficiaries that were recorded when you first signed up for them.  For many of those assets, that information may be outdated.

For instance, you may have survived a beneficiary, or you may want to rethink giving money to a married child thinking you wouldn’t want their spouse to get half of your money should they divorce.

You may also have made your beneficiary choice before you were married and have a parent or sibling listed on the account.   The investment company has to honor what they have on file and your spouse might not be too excited to hear about this if you should happen to predecease them.

You should also probably name contingent beneficiaries for these accounts, so that if your beneficiary dies before you and you don’t otherwise update the primary beneficiary, your contingent beneficiary would the receive your account.

Another consideration is to add a “per stirpes” designation which means if a beneficiary predeceases you, or disclaims their portion, their share would go to their descendants; usually their children.

In any case, it makes sense to take inventory and make sure you have listed beneficiary(s) for these types of accounts.  If you don’t have a beneficiary listed for IRA’s, life insurance, 401k’s or annuities they pass to your estate through your will, possibly with significant tax consequences that could have been avoided.

For assets other than those mentioned above, if you are married you can avoid having assets transfer through your will by having a joint owner with rights of survivorship.  With this registration, when one of the owners dies, the other submits proof of death and can take over as an individual owner.

If you are single and want to avoid having an asset pass through a will, you can include a “Transfer on Death” secondary owner.  This would accomplish your wishes for who the new owner would be at death.

Lastly, if you want to NOT go though a will, you could set up a living trust for your taxable assets, but this is a more expensive route to take.

Don’t take this part of your estate plan lightly.  I suggest you keep a record of all of your assets and that record would include your primary and contingent beneficiaries. You should also consult with your adviser or attorney for more help in this area.

You can email me directly at to set up a complimentary 2nd opinion review meeting.

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