Have you recently married? Divorced? Had a baby? Had a death in the family? If you answer yes to any of these questions, it's time to update your beneficiary designation forms.
Beneficiary forms are optional, but it's your responsibility to keep them current. Changes in family status don't automatically change a previous beneficiary form; a benefactor on an old form still could receive the benefits you designated.
Frequently asked questions:
When should I change my beneficiary designation?
Change beneficiary designations after major life events, such as birth, death, marriage, or divorce. You can change designations as often as you like.
What is a primary beneficiary?
The person, people, or entity you choose to receive your benefit proceeds.
What is a contingent beneficiary?
The person, people, or entity you choose to receive your benefit proceeds if the primary beneficiary(ies) dies or the entity no longer exists.
Who can be nominated as a beneficiary?
A primary or contingent beneficiary can be:
- A person or persons
- A corporation or organization
- Your estate
- A trust
If my children are minors, what should I do?
Consider leaving the money to your children's guardian or custodian, to be held in a custodial account.
What types of accounts typically require beneficiary designations?
Examples include retirement accounts, life insurance policies, pensions, and annuities.
What do I do if there isn't enough room on the form to fill in all my beneficiaries' information?
Sign, date, and attach another sheet. Include your name, address, Social Security number, and daytime telephone number.
Do I have to provide a beneficiary's Social Security number?
No. However, providing this information will ensure positive identification of your beneficiary and will make the claim process go much smoother.
Can the person who holds my power of attorney complete my form?
Yes, but only if the power of attorney documents specifically state the right to change beneficiary information. (Most power of attorney documents don't state these rights.)
Beneficiary designation form do's and don'ts
- Use full, proper names (for example, Susan L. Smith, not Mrs. Robert G. Smith).
- Make a copy of the form for yourself before you submit it, and distribute copies to beneficiaries.
- Fill out the form in pen.
- Think carefully about what you want to accomplish with your designation. For example, to whom and in what amount should your benefits be paid?
- Spell out what would happen if a beneficiary dies.
- Name the same person as both a primary and contingent beneficiary.
- Use a designation of beneficiary form to update a beneficiary's address (a signed letter is sufficient).
- Cross out or white out names on the form.
Note: The information presented here is general in nature and is not intended to constitute tax or legal advice. Before making a beneficiary designation, you may want to contact your personal tax and legal advisors.