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Choose beneficiaries now to help prevent problems later

Do you need to update your designation? Here is a scenario.

Did you put off completing the beneficiary designation form for your retirement account? If you completed it, when was the last time you checked to see if it still represents your wishes today? Letting this slide could cause unintended consequences. In the event of your passing, the proceeds from your University of Texas UT Saver Plans, as well as the rest of your estate, could be paid out according to out-of-date directives that no longer reflect your wishes. Such an oversight could leave a loved one in desperate need. Let’s look at an example. 

Nonspecific designees

David has two biological sons and one stepson. He loves all of them equally and views each as “his sons.” On his beneficiary form, David indicated his sons as the designees. By doing so, David unintentionally excluded his stepson. Due to the ambiguity of his designation, determining who makes up his sons is left for interpretation. Is it only his biological sons or is his stepson included as well? 

Always be specific when designating your beneficiary. Generalizations such as “my wife,” “children” or “charity” can indicate the incorrect person or entity and possibly exclude those you love. Make sure you completely list the name of each beneficiary and include their Social Security numbers if possible. 

What if there’s no beneficiary designation?

Generally, the death benefit would become part of your estate to be governed by the provisions of your will. But what if there’s no will? That can create a real problem for your heirs as the whole matter then goes into probate. Court costs can be higher, and someone else is dictating the terms for your estate. Also, your personal business becomes part of the public record — all sense of privacy is lost. 

Your retirement account’s death benefit should be apportioned according to your wishes. But you’re the one who has to make that happen. Take action now to complete or update your beneficiary designation form. Be complete. Be concise. And review it regularly to make sure it still represents your intentions.