Failure to keep a beneficiary designation updated could lead to big problems and prevent an intended party from receiving a distribution. For many, keeping up with the designation is an afterthought that was put down with the initial paperwork any never remembered again. However, a beneficiary audit is a good way to systematically review all accounts and policies and making sure they are updated with the most current information. For example, minors and the legally incompetent might need special care taken so review plan rules during the audit to see if something such as a trust will need to be set up. Ultimately, an audit is a low stress way of making sure that all accounts and policies as set up to benefit the right person and ensure that other issues, such as taxes and minors inability to collect, are prepared for in advance.
See Gary Altman, Don’t Forget to Audit Your Beneficiary Designations, Financial Planning Association, October 11, 2015.
Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.
