Who Gets What? A Quick Look at Beneficiaries

Let's talk about something that doesn't get enough attention. Your beneficiaries.

A beneficiary is just the person you name to get your money when you pass away. 

Most people set theirs up years ago and never look at them again. That's a mistake.

There are two main types you need to know about.

A primary beneficiary is your first choice. This is the person who gets the money. 

Most people name their spouse here.

A contingent beneficiary is your backup. They only get the money if your primary beneficiary has already passed away. 

Lots of people name their kids here.

Here's why this matters so much. Beneficiary forms beat your will every single time. 

It doesn't matter what your will or living trust says. 

The money goes to whoever is listed on the account. That's it.

So picture this. You got divorced ten years ago. You updated your will. But you forgot to change the beneficiary on your old 401(k). 

Guess who gets that money? Your ex. Not your current spouse. Not your kids.

It happens more than you'd think.

Here are the accounts you need to check.

Your IRAs and Roth IRAs. Your 401(k) and other work retirement plans. Your life insurance policies. Your annuities. Even some bank accounts and investment accounts.

Take a look at each one. Make sure your primary beneficiary is right. 

Make sure you have a contingent named too. If you don't have a backup and your primary passes first, your money could end up stuck in court.

Life changes. People get married. People get divorced. Kids grow up. Folks pass away. Your beneficiaries should change too.

A good rule of thumb is to review them every few years. Or any time something big happens in your life.

Having your beneficiaries named properly could save your family a huge headache down the road.