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Do You Need A  Beneficiary Review?

Do You Need A Beneficiary Review?

| April 04, 2023

In the event of a major life change, it is common for families to overlook updating beneficiary information. Keeping this information up to date is vital in order to avoid consequential mistakes in the future.

What could happen to cause you to have to update your beneficiary information?

NOT ONLY IN THE EVENT OF A DEATH, but any major life change can be an indication to call your financial advisor. Whether you’ve been recently married, welcomed a child into your life, or have undergone a divorce, these are all reasons to update your beneficiary information.

“A goal without a plan is just a wish.” – Antoine de Saint-Exupéry

If you don't designate a primary beneficiary, you could run into problems such as unnecessary taxes and fees or a benefit not landing in the desired hands.

Probate is the legal process of settling an estate, specifically, resolving all claims and distributing a decedent’s assets. Avoiding probate may be important to you if you want to avoid your assets potentially becoming part of the public record. Probate can also involve additional expenses, including attorney fees and probate costs, in addition to your time. These are all things that you, and your beneficiaries, want to avoid.

For retirement plan assets, however, valid beneficiary designations enable individuals and their heirs to bypass probate altogether. By properly completing your beneficiary designations for each retirement account, you can avoid the long, expensive and emotional process of probate with respect to those assets, and can help ensure that your wishes will be carried out. Further, this helps ensure the person named as beneficiary will indeed inherit their assets in the most tax-efficient manner.


One of your aims will be to see that the named beneficiaries are consistent with the your estate planning goals.

A designated beneficiary is an individual who is either a spouse or a non-spouse. The spouse can do almost anything they want with the account. A non­-spouse is any individual who is not the spouse. Non-spouse beneficiary options are more limited than spouse options, especially when transferring assets. If the agreement permits it, designated beneficiaries can choose to stretch retirement distributions over their lifetimes.

A non-designated beneficiary is usually a trust, charity or estate, and cannot stretch distributions.

A default beneficiary is the beneficiary named by the retirement plan documents in case the account owner did not name a beneficiary or all named beneficiaries have died. Default beneficiaries can be either designated or non-designated.

A contingent beneficiary is the second beneficiary in line to inherit the account owner’s assets if the primary beneficiary predeceases the account owner, or they disclaim their interest. If the primary beneficiary inherits the assets, the contingent beneficiary can no longer make any claim to the assets.


- Missing forms

- Forms or online designations without a beneficiary named

- Incorrect beneficiary contact information

- The wrong beneficiary listed

- No contingent beneficiaries listed

- Beneficiary shares that do not add up to 100%

- Improper titling of the inherited account

Here are some questions your financial planner might ask you:

1. Where are copies of the beneficiary designation/form kept and are they current?

2. Is there a contingent beneficiary named?

3. Is there a signed beneficiary designation on file with you?

4. Do you have a copy of your client’s most recent signed beneficiary designation?

5. Does the beneficiary designation allow the your beneficiaries to stretch payouts?

6. Who is your primary beneficiary and what percent do they inherit?

7. Who are your contingent beneficiaries and what percent does each inherit?

8. If there are multiple beneficiaries, is each beneficiary’s share on the beneficiary designation clearly stated?

Rest assured, updating your beneficiary information does not take much time or effort with one of our advisors on your side.