1. You want the heirs of your choice to receive your assets

By naming your beneficiaries, you ensure that your money goes where you intend for it to go. That could be to a relative who really needs the financial assistance, a charity that’s close to your heart or whomever you want the money directed to. Without clear directions as to your wishes, executors or the state will follow only what the law says in distributing your assets.

“When you name beneficiaries you ensure that after you die, your assets go to the people or charities you choose,” says Stephen Akin, a registered investment adviser at Akin Investments in Biloxi, Miss.

By naming a beneficiary, that person becomes “first in line to receive assets upon your death,” says Akin, noting that it’s not necessary to be married to the beneficiary.

While spouses often leave all their money to each other, naming a beneficiary also means that your assets will go to whom you want and you won’t have to rely on the good faith of a spouse.

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Stephen Akin a Registered Investment Advisor in Biloxi, Mississippi says a beneficiary becomes “first in line to receive assets upon your death,”

5 reasons why you should add beneficiaries to your accounts right now

Bankrate.com by James Royal, Investing and wealth management reporter.

But that little detail is often the reason that you have a financial account, for example, with a life insurer. And naming a beneficiary while you’re able to can often avoid untold problems and complications later when heirs or other family members struggle to arrange your affairs. Here are five reasons why you should consider adding beneficiaries to your accounts right now, especially in the midst of the coronavirus pandemic where thousands of families are facing unexpected losses of life as a result of the outbreak. 1. You want the heirs of your choice to receive your assets By naming your beneficiaries, you ensure that your money goes where you intend for it to go. That could be to a relative who really needs the financial assistance, a charity that’s close to your heart or whomever you want the money directed to. Without clear directions as to your wishes, executors or the state will follow only what the law says in distributing your assets. “When you name beneficiaries you ensure that after you die, your assets go to the people or charities you choose,” says Stephen Akin, a registered investment adviser at Akin Investments in Biloxi, Miss. By naming a beneficiary, that person becomes “first in line to receive assets upon your death,” says Akin, noting that it’s not necessary to be married to the beneficiary. While spouses often leave all their money to each other, naming a beneficiary also means that your assets will go to whom you want and you won’t have to rely on the good faith of a spouse. “While you hope that a surviving spouse will honor your wishes even if they are not in writing, you may accidentally disinherit your children,” says Shann Chaudhry, an attorney in San Antonio, Texas. You can add a single primary beneficiary who receives the full account or multiple primary beneficiaries, who may each receive a percentage of the account, as designated by you. In addition, you may add contingent beneficiaries to the account, in case of the death of one of the primary beneficiaries in the interim since you named them. For a retirement account such as an IRA, you may also name a trust as a beneficiary, and the asset will be distributed as described in the trust’s plans. 2. You can simplify the probate process “I am a big believer in attaching beneficiaries to accounts whenever possible,” says Morris Armstrong, head of Morris Armstrong EA in Cheshire, Conn., noting that this step simplifies the probate process after an individual dies. Probate can take months before the courts name an executor to handle the estate, and a lot can happen in the interim, says Armstrong. “If there’s no beneficiary, then the money goes into the decedent’s estate, where it can be used by a court-appointed executor to settle claims, pay bills, etc,” says Diana Burrell, a spokesperson for Hanscom Federal Credit Union in the Boston area. “If you intended for that money to go to a certain person, they may get a lot less than you intended after those claims are paid.” “I had one case where the client simply did not want to attach beneficiary designations to an account,” says Armstrong. “She was ill but did not want to address the issue. It created more reporting issues for the probate process than was necessary.” And with a named beneficiary, says Armstrong, “Usually all that you need to make a claim on an account where you are the beneficiary is ID and a copy of the death certificate.” 3. Your heirs have changed It can be worthwhile to recheck your financial accounts to make sure that they have up-to-date beneficiary designations. It may have been years, if not decades, since you’ve made your designation, and our lives change. People go in and out of them – for a variety of reasons — and you may want other people to inherit your money rather than the original designees. “If you’re married, you can almost always change the beneficiary of your accounts without your spouse’s permission,” says Russell D. Knight, an attorney in Chicago. “In fact, this is one of the first recommendations I make in a divorce process. The worst that can happen is that you’ll be ordered to put the beneficiary [designation] back into the spouse’s name.” “If you die during your divorce, those accounts will almost always go to the beneficiary, not your spouse. The big exception to this is 401(k)s, IRAs and other tax-deferred accounts. These are governed by federal law and require the signature of a spouse to change beneficiaries,” he says. Naming a beneficiary may be just as much about avoiding the money going to someone you don’t want as it is to those you do want to have it. So it’s important to recheck your accounts periodically, even if you know you’ve named a beneficiary. With online accounts this process is simple and can be done each year around tax time, when you typically have to access the accounts anyway. With other accounts, you may have to call up the institution and confirm your designations. In either case, if you want to change your designee, the institution will clearly lay out the process for you to do so. 4. Your Beneficiaries trump your will “Beneficiaries trump wills,” says Burrell. Burrell.“ Make sure your beneficiaries match your will’s directives,” she says. “Many people find out the hard way that the beneficiary gets the assets on an account, not the person named in a will.” Consulting an attorney on any beneficiary changes can also be a smart move, if you have other estate plans, because you don’t want them disrupted. You want to be sure that your estate plan is clear on who gets which assets, and avoids potentially conflicting directions. “A knowledgeable estate planner will use your trust as the centerpiece of your estate plan and make sure to coordinate and align the beneficiaries on your assets so that your intent will become the reality once you have passed away,” says Chaudhry. 5. You can avoid family fights Naming a beneficiary and staying on top of your affairs not only helps your surviving family deal with your estate more easily, but it also helps them avoid acrimonious fights. “If you want to avoid family fights, make sure your beneficiaries are who they should be,” says Burrell. With clearly named beneficiaries, you can help your family understand exactly what your wishes are and avoid the infighting that too often comes when a relative leaves assets to family members. Bottom line Naming a beneficiary is an easy thing to skip over when opening an account, but this small step can save a huge headache – and potentially a lot of money – later on. So take an inventory of your financial accounts today, and ensure that your wishes are up to date. Then resolve to keep the accounts updated annually so that you continue to avoid problems for yourself and your heirs. https://www.bankrate.com/banking/add-beneficiaries-to-your-financial-accounts/