February 1, 2018 Edition

What if I forget to update my beneficiaries?

The simple answer is this: If you want the right people to get your money, you’ll need to keep your beneficiary designations up-to-date, even if your will or estate plan already is. That’s because a beneficiary form will override whatever you’ve said in your will or estate plan.

If you’ve got a bank, brokerage or retirement account, annuity or life insurance policy, you’ve probably filled out a beneficiary designation form. Most of the time, we fill them out then forget about them. Years pass. Then, when changes happen in our lives

– we get married, divorced, lose a spouse, gain a child or grandchild – we might remember to update our will, but oftentimes forget about all of those beneficiary forms.

That’s where things can get a bit sticky. Not updating those forms could force future generations to pay too much in taxes, not receive their rightful inheritance, or could lead to other unfortunate consequences.

Here’s an overview of what could happen, depending on who you name as beneficiary:

If your named beneficiary

Here is where the money will go when you die…
Your ex-spouse
The money will go directly to that person, whether or
not you remarried or named someone else in your will.
A minor
The court will appoint someone to hold and manage
the funds, which can be a time-consuming and
expensive process. When the minor turns 18 or 21
(depending on the state), he or she will be entitled to
the money in the account, and will be free to spend it
wisely or unwisely.
Someone with special needs
Anything more than a small cash gift could prevent a
person with special needs from receiving government
assistance, unless the money goes into a special
“supplemental needs” trust.
Your estate
The money will directly go to your estate, to be
distributed according to your will. If that money was
in a retirement plan, the full amount must be paid out –and taxed – within five years. If you name an
individual instead, that person can stretch out the
payments, and taxes, over years or even decades,
taking advantage of the potential for growth too.

Make updating beneficiaries a part of your financial review

Consider adding updating beneficiaries to the list of things to go over during your annual review with your financial professional. Or, at the very least, update all of your beneficiary forms after you experience a life-changing event, such as marriage, divorce, birth or death of a loved one, as well as when you change jobs or retire, since any time you roll over a retirement plan, you’ll need to assign a new beneficiary.

Ready to update your beneficiary forms, but not sure who to name?

Contact your financial professional for help to ensure that your financial accounts and contracts are set up correctly and will benefit the people you want.

Please be advised that this document is not intended as legal or tax advice. Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or the marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent tax advisor. AXA Advisors, LLC and AXA Network, LLC do not provide tax advice or legal advice. This article is provided by T. J. Henriques. T. J. Henriques offers securities through AXA Advisors, LLC(member FINRA, SIPC) 730 BAYFRONT PARKWAY SUITE 3A PENSACOLA, FL 32502 and offers annuity and insurance products through an insurance brokerage af.liate, AXA Network, LLC and its subsidiaries. Bluewater Wealth Strategies, LLC is not a registered investment advisor and is not owned or operated by AXA Advisors or AXA Network.

GE-125237 (04/17)(Exp.04/19)

T. J. Henriques, Certified Financial Planner

730 Bayfront Parkway Suite 3A, Pensacola FL 32502 (850) 435-3797

2018-02-01 / Features

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