Day 5: Review Your Beneficiaries
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Welcome to the 7-Day Financial Reset, a weeklong challenge designed to help you start the new year off strong. We’ll guide you through one practical money task each day, so you can build habits that make your finances work better for you.
Beneficiaries are one of those boring but crucial details in life — and it’s important to revisit your selections regularly. If you haven’t peeked at them in the past 12 months, today’s a good day for the task!
What’s a beneficiary? It’s simply the person (or people) you’ve picked to receive your assets when you die. You generally name a beneficiary on things like retirement accounts, life insurance policies, investment accounts and bank accounts.
Why it’s important: Beneficiary choices override your will. That means even if you’ve updated your estate plan, your old beneficiary picks still stand.
How to update your selections:
- List all of your accounts that have (or could have) beneficiaries. Note each individual retirement account, investment account, bank account, life insurance policy, 529 plan, annuity, and health savings account, flexible spending account and any other account that has a beneficiary election.
- Log in to each account. Look for account settings and beneficiary selections. If you can’t find the right spot, give the company a call for direction.
- Check your primary beneficiary. If it’s not the person you want (or no one is named), update information to reflect your current choice. You can have more than one primary beneficiary.
- Add a contingent (secondary) beneficiary. Just as things can happen to you, things can happen to your primary beneficiary, so choose a backup (or backups).
Keep in mind:
- Be cautious when naming minor children directly for large assets. It creates court tangles since children generally can’t legally manage that money on their own until they hit age 18 or 21, depending on the state. Trusts or custodial accounts are commonly used to receive and manage funds on behalf of minors. If you need to set something up, consider consulting an estate planning attorney.
- Revisit after big life events. Once a year is a good check-in cadence unless you’ve had a marriage, birth, divorce or death in the family. In that case, look over your documents again.
Come back tomorrow for the next 7-Day Financial Reset challenge.
» Need to back up a bit? Day 4: Freeze your credit
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