A man forgetting that his first wife’s name was left as a beneficiary to a retirement account is an easy mistake to make. His second wife, who was still married to him at the time of his death, expects to receive the money from her husband’s 401(k), but it went to his first wife. Fortunately, this is an easy mistake to correct; a New Hampshire resident simply needs to make sure that all of your beneficiary designations are up-to-date.
The logic behind naming beneficiaries
The reason to name beneficiaries is to make it clear how you would like your assets to be distributed. In naming beneficiaries and estate planning, you can make sure that your assets are left to those people, entities, or charities you choose. Plus, it clears the way for a fast transfer of assets to the named beneficiaries by minimizing red tape or the possibility that your estate would get held up in a New Hampshire probate court.
Who or what can be named as beneficiaries
Most people name family members, spouses, children, or other relatives as beneficiaries. However, you can also choose:
- An estate
- A charity
- A trustee as a beneficiary
Trustees manage trust fund accounts. For example, someone with a disabled family member could set up a trust fund for the family member and could appoint a trustee to oversee the funds in the account.
The kinds of accounts that need beneficiary designations
Retirement accounts are the most common kind of account to require a beneficiary designation. There are several different types of retirement accounts, including Traditional IRA, 457, 401(k), 4i03(b), and Roth IRA. Other kinds of accounts that need beneficiaries named are pension plans, annuity contracts, and life insurance policies.
Anytime you experience a significant life change, such as divorce, remarriage, the birth of children, or the birth of grandchildren, you should update your named beneficiaries. A professional financial planner or an attorney with experience in estate planning can help you decide how you want to distribute your assets and ensure that you have named the right beneficiaries for your retirement accounts.