Beneficiary Designations

Most retirement plans, life insurance policies, annuities and certain other types of accounts allow you to name who will receive the proceeds when you die by filling out a beneficiary designation form. And it is important that you do so. If you don’t properly complete the beneficiary designation form, that account may be subject to probate and end up in the wrong hands.

So what does properly completing a beneficiary designation form mean? First, you should name your primary beneficiary or beneficiaries. You can name one person (or an institution or trust) as sole beneficiary; or you can name more than one beneficiary and specify what percentage of the account each person will receive. You should also name “contingent” or secondary beneficiaries in case your primary beneficiary dies before you. Failure to do so may end up in a probate court and your retirement account may end up in the hands of an unintended person. Keep a copy with your important papers.