What is a Beneficiary Form?

What is a Beneficiary Form?

March 24, 2021

By Melinda Gustafson Gervasi

Every day I work with clients to create or update an estate plan.  Over the years I have learned many things from my clients.  One of the standout lessons is that many people are fuzzy on what a beneficiary form is.  Beneficiary forms are a critical piece of an estate plan because they control the distribution of certain assets  Here are a few key concepts I share with clients when educating them about this area of estate planning:

• The forms tell your financial service company where those specific assets will go upon your death. 
• Normally you can list a primary beneficiary (or beneficiaries) as well as contingent(s).
• But for a few exceptions, the person(s) named on your beneficiary form will receive those funds no matter what your will or trust might say.
• Name the person(s) you intend for the assets to belong to on the form rather than a person who will "take care of handling the money".  The person on the form gets the asset and can do as they please with the asset.  If the person meant to "handle things" dies after receiving the funds, the asset will then pass according to his/her estate plan.
• Common financial assets that can be distributed using a beneficiary form include, but are not limited to:
• Life insurance
• Traditional or Roth IRAs
• 401k, 403b, etc.
• Pension plan
• Annuity 
• Brokerage account
• Digital content, funds or tools
• Do not trust your financial company to keep a record of your beneficiary form.  Companies lose them far too often (check future posts on this blog for my personal story on a Roth IRA of mine that all of a sudden had no beneficiary form). I recommend a screen shot, print out, or some hard copy proof showing your beneficiary designations for each account.

Now would be a wise time to take out the paperwork or pull up online the files related to your financial assets.  Ideally, you can avoid an estate planning stumble along with the facial expression of my dear husband, who does his best playing football with are very athletically inclined 12 year old son. 

Oh no! Image by M. Gustafson Gervasi 2021

Thanks for reading. Remember, a blog is not legal advice nor should it be taken as such.  Please seek legal advice from a licensed attorney in your state of residence for counsel on your specific situation.  This post is meant to spark thought and discussion.  It is not dispensing legal advice.