Don't get spooked and ignore designating beneficiaries on financial accounts!
This is a critical but often overlooked step in financial and estate planning. Naming beneficiaries ensures that your assets are transferred smoothly and according to your wishes.
When you designate a beneficiary, the assets in that account bypass probate—a potentially lengthy and costly legal process—and go directly to the person or organization you’ve named. This simplifies the transfer and ensures your loved ones have access to funds when they need them most.
It’s essential to know that beneficiary designations take precedence over instructions in your will. Even if your will specifies different intentions, the beneficiary listed on an account will legally “trump” those instructions. That’s why ensuring your designations are accurate and aligned with your overall financial plan is crucial.
Life changes like marriage, divorce, or the birth of children make it essential to regularly review and update your beneficiary designations. Make sure the individuals listed align with your current intentions and estate plan.
Ensure all relevant accounts have beneficiaries set, including:
401(k)s and IRAs
Bank accounts (using Payable on Death (POD) or Transfer on Death (TOD) designations) and Brokerage Accounts
Health savings accounts (HSAs)
Annuities and Life insurance policies
Primary vs. Contingent Beneficiaries: Always list both, so there’s a clear backup if your primary beneficiary cannot inherit.
Consistent with Estate Plan: Make sure your beneficiary designations align with your wills or trust to avoid conflicts.
Communicate Your Plans: Let your loved ones know about your intentions to reduce confusion or disputes in the future.
While a will is an important step in financial and estate planning, beneficiary designations are equally, if not more, essential. They ensure that your wealth transfers efficiently and according to your wishes, giving peace of mind to both you and your loved ones. Make it a habit to review them annually—just like you would with your overall financial plan. Having a solid financial team around that focuses on holistic financial planning can be a smart decision to make. Financial Planning is much more than budgeting and investing. If you want help with any of this, then Let's Talk.
All the best,
Wela Financial Advisory
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Brent Forrest & Associates, LLC. dba Wela Financial Advisory (Wela) is a registered investment adviser. The information presented is for educational purposes only. It should not be considered specific investment advice, does not take into consideration your specific situation, and does not intend to make an offer or solicitation for the sale or purchase of any securities or investment strategies. Investments involve risk and are not guaranteed. Be sure to consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. This article and images may have been enhanced by utilizing artificial intelligence (AI). Brent Forrest & Associates, LLC dba Wela Financial Advisory (Wela) is a registered investment adviser. The information presented is for educational purposes only and is not intended to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance. Wela may discuss and display, charts, graphs, formulas which are not intended to be used by themselves to determine which securities to buy or sell, or when to buy or sell them. Such charts and graphs offer limited information and should not be used on their own to make investment decisions.
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