By Joseph Duffey
CLU®, RICP®, NSSA®
Owner, Everest Financial, Ft. Mitchell, KY
It’s easy to assume your estate plan is set once your will is in place. But one of the most overlooked—and potentially impactful—details in retirement planning has nothing to do with your will at all. When was the last time you checked your beneficiaries?
In keeping with the “monthly financial to-do list” theme we introduced in January, this is a great time to review your beneficiary designations to make sure they still reflect your current wishes.
Beneficiary designations on IRAs, 401(k)s, life insurance policies, and annuities typically take precedence over what’s written in your will. So even if your will clearly states how you want your assets distributed, an outdated beneficiary form could direct those assets somewhere entirely different.
For example, I’ve seen situations where a former spouse remained listed as a beneficiary simply because the paperwork was never updated. In other cases, families unintentionally created complications by naming minor children or failing to account for life changes like remarriage, births, or deaths.
Beneficiary designations are essentially instructions to the financial institution about who should receive the asset upon your passing. Because these designations are legally binding, it’s important to keep them current and aligned with your broader estate and income strategy.
Here are a few key areas to review and what they could mean for your retirement plan:
• Primary vs. contingent beneficiaries: Your primary beneficiary is first in line to receive the asset, while contingent beneficiaries step in if the primary is no longer living. Keeping both updated may help avoid unintended outcomes.
• Life changes: Marriage, divorce, the birth of a child or grandchild, or the loss of a loved one can all impact your intentions. Outdated designations may not reflect your current family structure.
• Retirement accounts (IRAs and 401(k)s): These accounts often make up a significant portion of retirement savings. Incorrect or outdated beneficiaries could affect how efficiently those assets transfer to your heirs.
• Life insurance policies and annuities: These contracts pay directly to named beneficiaries. If those names are outdated, the proceeds may not go where you expect.
• Estate coordination: Your beneficiary designations should work in harmony with your will, trusts, and overall financial strategy. Misalignment can create confusion or delays for your loved ones.
It’s also worth noting that some designations may have tax implications or distribution rules that vary depending on who is named. While the details can differ, reviewing these choices periodically can help ensure they still support your overall objectives.
The good news is that reviewing your beneficiaries doesn’t typically take much time—but it can make a meaningful difference. A quick check now may help prevent unintended consequences later and provide greater clarity for those you care about.
If it’s been a while since you’ve reviewed your accounts, this month is a great opportunity to revisit them and confirm everything is up to date.
If you’d like a second set of eyes on your beneficiary designations or want to make sure they align with your retirement income strategy, I’m available to help. At Everest Financial Inc., we work with individuals and families to coordinate the different pieces of their financial picture.
You can reach me, Joe Duffey, at 859-291-9290 or send me an email at jdduffey@everestfinancial.net. Learn more at everestfinancial.net.
Also, did you know IT’S SEMINAR SEASON? You can register at everestfinancial.net/events or call 859-291-9290 for any or all of the following:
• The Social Security Puzzle, April 21 or 22 in Convington, KY, and April 23 in Cincinnati, OH.
• Taxes in Retirement, May 5 or 6 in Conington, KY, and May 7 in Cincinnati, OH.
• Financial Empowerment for Women, June 9 or 10 in Covington, KY, and June 11 in Cincinnati, OH.
