Who are the beneficiaries for your accounts?

Choosing a beneficiary may seem like a “set it and forget it” task. However, it’s an important designation that could seriously affect your estate and heirs. Nearly all financial vehicles, including life insurance policies and retirement plans, ask you to name a beneficiary, and most make it very easy to change or update your designation.

Designating a beneficiary tells a financial, institution or benefit provider how to proceed after you die. So, having beneficiary information updated, can cut down on costly escrow or estate proceedings.

Remember the 401(k) plan at your first job? You may want to roll it over to another account or update the beneficiary. If the beneficiary you once named is now deceased, an ex-spouse or a defunct charity, it could make distribution of your estate especially cumbersome — and expensive.

It adds further complications if named beneficiaries are different from the heirs of your estate since beneficiary designations will override a will.

Updating beneficiaries for all your financial accounts, policies and benefits, lets you minimize the stress and strain on loved ones who manage your estate and ensure your wishes are followed. Otherwise, open issues may cause delays in your estate’s distribution and increase legal fees.

There are many other factors to consider when choosing or updating your beneficiaries. Contact a financial professional or speak with an attorney, accountant or other trusted advisor about your specific situation.