It seems as though the paperwork never ends when setting up new accounts, and that can make it easy to skip important yet not mandatory account maintenance steps. It might feel cumbersome to include a current email address or work address, but these items are on the forms for a reason.
A big issue we see is with designating your beneficiaries during the account set up process. It’s important to designate who you wish to receive your assets through assigning beneficiaries for retirement accounts and completing TOD (Transfer on Death) paperwork for taxable accounts. Instructions left in a will, if you have one, might not be enough to ensure your assets are transferred properly.
Does this seem like extra work? It can if you’re not prepared from the get go. Maybe you don’t have all of the items needed such as date of birth and social security number, or maybe you just haven’t decided who your assets will go to in the event you pass away. Unfortunately, you’re hurting your beneficiaries by not completing this step. Instead of your assets transferring to your beneficiaries, your assets will have to go into an estate and even if you’ve stated in your will who gets what, it will be much longer before anyone sees their portion of the assets.
It’s also good practice to review your beneficiary designations when you experience a life change. We live in complicated times where multiple marriages, step-children, legal guardians and non-traditional families are common place. Here are a few common events that could change how your accounts are designated:
• Change in Marital Status
• Birth or Adoption of Children
• Death of a Spouse, Significant Other or Child
• Consolidation of Accounts
Any of these events are a good indicator that it’s time to review your beneficiaries. At the very least, they should be reviewed annually if you haven’t experienced a life event.