Good time for an annual beneficiary review

Victoria A. Hemiup, BridgeTower Media Newswires

After your loved one passes is not the time to find out that the beneficiaries listed on their IRA account are not correct. Checking the beneficiaries on your IRA, 401(k) and insurance policies is something that is frequently overlooked. Once the account owner dies, the beneficiaries cannot be changed - regardless of what your will or trust states.

I recently received a call from a friend who had just lost his mother. The mother had an IRA account for which she never changed the beneficiary. Half of the account went to a relative that was estranged from the family. He knew that the disposition of his mother's IRA account was not what she would have wanted. He was powerless to do anything about it. It could have been a very simple fix had they taken the time to update the beneficiaries prior to her death. It is my suggestions that when meeting with your financial advisor, if you have qualified assets, the agenda should include a review of your beneficiaries. The following questions should be addressed:

- Are the beneficiaries listed accurate?

- Are the percentages of assets left to each person correct?

- Should a contingent beneficiary be listed?

Life is unpredictable. There is marriage, remarriage, death, divorce and the birth of children and grandchildren. Listing your spouse as your primary beneficiary is a common practice. It is also advisable to list contingent beneficiaries should the primary die before the account owner. If you name your children as contingent beneficiaries and they have children you may want to consider adding the Latin term "per stirpes." Per stirpes means that should the contingent beneficiary predecease the account owner; the share allotted to them would be equally distributed among their children. You may also select "pro rata," which means that the all assets will be given to the living contingent beneficiary.

When completing the beneficiary designation form, you should be aware that once the assets have been placed under the name of the designated beneficiary, they have the right to name their own beneficiaries. For example, if the husband dies and his wife is the beneficiary of the IRA, she is not obligated to carry out the wishes of the deceased spouse to leave assets to the children from a former marriage. All family dynamics are different. It may be prudent to consult legal counsel with assistance in making the best beneficiary choice for the account owner.

I cannot stress enough how important it is to complete the beneficiary designation form and keep the form up-to-date. No one likes to think about death, but it is the only sure thing besides taxes. If you can check your smoke detectors twice a year when we have our semiannual time changes, make a note to annually review your beneficiaries. It is that simple. Talk to your financial advisor and insurance providers to insure there are no surprises for your family.


Victoria A. Hemiup is an assistant vice president at Karpus Investment Management, a local independent, registered investment advisor managing assets for individuals, corporations, non-profits and trustees. Offices are located at 183 Sully's Trail, Pittsford, NY 14534, (585) 586-4680.

Published: Tue, Apr 30, 2019