Who Gets Your Money?

Have you designated a beneficiary for your retirement accounts, life insurance policy, and annuities? If not, you don’t control who gets your money when you die.

A beneficiary is the person/persons or entity you want to get your assets when you pass. It could be a spouse, child, friend, trust you’ve established, or a charity. You could also have more than one beneficiary for a single asset; maybe you want to leave your retirement account to your two kids and make sure each gets half.

Make sure you have designated a beneficiary or beneficiaries for your assets. If you don’t, when you die, “the money will likely go to your estate,” says Carol Craig, Senior Vice President and Senior Trust Officer with Town and Country Bank. “Then it could potentially be tied up in a probate proceeding or, if you don’t have a will, it would be subject to the laws of the state where you live and the state will decide who gets your money.”

Make sure you change your beneficiaries when your circumstances change and when beneficiaries change their names. As your life changes, you may want to add or remove beneficiaries, especially after you begin or end a marriage, have or adopt children, start a business, and the like. If your beneficiary changes their name, update that in your beneficiary designation. Craig gives the classic example of a person who got divorced but didn’t change the beneficiary on their life insurance policy, and when they died, their former spouse received that money.

To designate a beneficiary you will need the person’s:

• Social Security Number
• Current address
• Official name (including suffix, like “junior” or “senior”)
• Telephone number
• Birthdate

If your beneficiary is a charity or trust, you will need its Tax Identification Number. Sometimes the forms you need to complete will be online. Just ask your bank, insurance company, or financial advisor. You should name two beneficiaries: a primary and secondary. The secondary gets the asset if the primary (your first beneficiary) dies before you do.

Designating a beneficiary helps you and the beneficiary.

You get peace of mind knowing who gets your assets and your beneficiary gets your asset faster. They won’t have to wait for your estate to go through the sometimes lengthy and costly probate court process; they will get the asset when you die.

To designate who gets your bank assets, you need to complete a Payable on Death form, or POD. Say you have a savings account just for travel expenses and you want it to go to your grandchild, tell your bank you want to fill out a POD for it. That stipulates who gets that money upon your death. “It doesn’t give that person any control of your account during your lifetime,” says Craig. “It’s not the same as power of attorney or joint tenant. But it simplifies and expedites transferring the money upon your death because it won’t have to go through the court system. The process won’t be subject to probate or your will.” Ask your bank about completing a POD. Often, it’s an online form.

There are cases when a person can’t designate a beneficiary to their asset – if it’s subject to a court order or you have pledged it, particularly a life insurance policy, as collateral for a loan. Otherwise, it’s up to you to say who gets your money. Make sure you use that right by designating your beneficiaries and updating them as needed. Talk to your legal or financial advisor today if you need help with this.