Are Your IRA Beneficiary Designation Forms Current?

June 2017Withdraw Money 401k

While many of us ensure that important documents such as wills are updated on a frequent basis, we tend to neglect our IRA retirement account beneficiary designations.

Beneficiary designations of IRA retirement accounts are not governed by provisions of a will. Instead, the beneficiary designations you provide on these accounts trump all other documents. In order to provide for the intended beneficiary, it is important to keep these retirement documents updated, especially upon the occurrence of life events such as divorce, death, birth of a child, second marriages, the creation of trusts, and other changes that may affect your financial goals.

There have been numerous court cases in which the intended family members battled in court for a legal determination of the true beneficiary. The court's decisions, however, were not necessarily what the deceased would have wanted (due to outdated forms) and unintended parties received the inheritances, not to mention unanticipated tax consequences.

When determining your beneficiaries, there are a number of factors to consider, such as contingent beneficiaries, default beneficiary provisions, and options. Making a proper beneficiary designation should be seen as a critical component of your overall estate plan. We recommend you review your documents to ensure they are current and reflect your intended beneficiaries.

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