If you currently own an IRA, you’ve probably wondered, at one time or another, who will inherit the account after you die. Though you might not have given this a lot of significant thought, it’s actually a very important thing to consider. You are actually in charge of who inherits this money and setting up your beneficiaries can make the lives of your loved ones much easier. Plus, it gives you a real control over your IRA and lets you live with the peace of mind that your IRA will go where you see fit. Death isn’t something anyone likes to think about, but planning for the inevitable is extremely important. If you don’t take care of it now, your loved ones will have to, or they may even miss out on the money you’ve worked so hard to accumulate.
Beneficiaries, meaning the recipients of your IRA, can be almost anyone or anything of your choosing. You can designate another friend or loved one, several people, or even a charity or organization. If you do not name a beneficiary before your passing, there will likely be many problems with the handling of your estate. That’s why it’s very important, no matter what your age or health, to designate beneficiaries now, while you’re still here.
If you have already established a will, you might not think that you need to name a beneficiary. This is actually not true. A beneficiary who has been named on a life insurance policy or on an IRA is considered more important than one named on a will. You must also understand that trust beneficiaries do not supersede direct IRA beneficiaries. So, naming IRA beneficiaries concretely is the best and simplest way to make sure your account goes where you intend for it to. Otherwise, things might not turn out like you planned at all.
As your life changes, make sure to update your beneficiary designation as necessary. Serious life events such as a divorce, a marriage, a remarriage, the birth of a child, or the death of a beneficiary will
obviously indicate the need for a change in your plans. For that reason, this is always a good time to make changes or just as you see fit. Most financial advisors, however, advise reevaluating beneficiaries at least one time per year. This will just take a few moments of your time and will ensure that your beneficiaries list stays up to date and correct for your current feelings and situation.
This might seem like a lot of hassle, but in the end, it will be worth it. Your friends, family, and other loved ones will not have to argue or worry about what will happen to the IRA money if you plan appropriately. This can make an already difficult time for them much easier and less stressful. Essentially, it’s one of the biggest ways to show your love and care for the important people in your life. For this reason, it is in your best interest to talk to your financial advisor today about designating beneficiaries.