We often encourage people to review their beneficiary forms to make sure the right people are named and all of their personal information is as current as possible. Just remember that a life insurance policy is not the only piece of your estate that has a beneficiary: Your IRAs do, too.
It used to be that a person’s most valuable asset was his primary residence. Nowadays, we aren’t so sure. The Philadelphia metro area’s residential real estate market is on the rebound, but after the foreclosure crisis, the wave of underwater mortgages and a surge in loan refinancing, the home may just be one of a few pretty solid assets.
In its place, the individual retirement account now stands as a retired person’s largest asset. Baby Boomers apparently took advantage of the dual-purpose investment tool. An IRA supports the account holder in retirement, certainly, but it also provides for heirs after the account holder dies.
It is important, then, to make sure the paperwork for an IRA is up-to-date. We aren’t just talking about the contribution elections and investment choices, either. We are talking about the beneficiary form.
When you are going through your estate plan at the end of the year — there is some tax planning that goes hand-in-hand with an estate plan, so the end of the year is a good time to take care of both — take a look at the beneficiary forms for your IRA. And as you do this, try to avoid some common mistakes.
For example, did you update your beneficiary form after you got married or divorced? Have you had a falling out with your beneficiary, or has that person predeceased you? It is time to clear up any confusion.
When we return from the Thanksgiving holiday, we will continue the list of tips that should help you protect your investment.
Source: Bankrate.com, “5 IRA beneficiary form mistakes to avoid,” Shelly K. Schwartz, accessed Nov. 20, 2014