Investopedia outlines the many reasons it is so important to update the beneficiaries on your retirement accounts. Whether you update your beneficiaries right after a major life change or go over this information periodically with a Fee-Only financial advisor, this is not something you want to ignore.
You may already know that you need to check to see who your beneficiaries are if you divorce, remarry, or have a child and that if you don’t designate someone, the courts will decide. But have those of you leaving money to charity checked periodically to make sure the charity is still in operation and that is operating as you would want? Couples need to put a plan in place in case both partners die around the same time (instead of one outliving the other for years as people expect will happen). People also don’t expect to outlive their beneficiaries but it can happen. You can work with professionals to plan for these occurrences. For example, there are IRAs that allow you to customize your beneficiary designation.
The thing is, the decisions you make can haunt your heirs in the years to come. We’ve already told you about the woman who learned that her husband’s ex-wife was the designee and took the case to the Supreme Court. Here is a rather treacherous and sinister tale of not changing your beneficiaries:
Firefighter William Walker died after his wife of four months arranged his murder so she could get his insurance money. Walker’s wife got friends of her teenage daughter to carry out the deed but as Yahoo! points out, she did not profit:
But this is where things get interesting: Walker was married prior and never changed the name of the beneficiary on his life insurance policy, so his ex-wife will be the one to inherit $100,000 plus his city pension.
While there was a sort of poetic justice in this instance, you really do want to keep your beneficiaries updated.