Mistakes To Avoid When Naming A Beneficiary Designation

Posted On February 24th, 2021 by Michael Dunham

Learn more about naming a beneficiary designation.

Nobody likes to think of what’s after death. It gives us that little knot in our stomach that makes us feel a tad bit woozy. You know the one, you all do. But sometimes, it’s suitable to discuss what happens when we draw our last breath and strike our final heartbeat. Sometimes, it’s an absolute necessity. Whether you like it or not, life continues on long after you’ve been put to rest six feet under the ground. This is a fact of life, a necessary evil that comes along in everyone’s life. This is why it’s more important now than ever to ensure that your estate is put in order. If not for you, then for the loved ones you leave behind. 

One crucial measure that should be taken when it comes to putting your estate in order is naming your beneficiary designation. Not familiar with precisely what a beneficiary is? Don’t worry, most people aren’t. In simpler terms, a beneficiary designation allows you to transfer any or all of your assets to any individual, no matter what your will or testimony says. See, it’s not confusing at all, important, but not confusing. Designating someone as your beneficiary is an incredibly important and serious task, something that should be considered with the utmost severity. But as the great Ben Parker told his empowered nephew Peter, with great power comes great responsibility. This is why it is absolutely crucial that you take your time and do your research before making anyone your beneficiary. Here are a few severe mistakes to avoid when it comes to a beneficiary designation. 

Not Naming A Beneficiary At All 

The biggest mistake an individual can make when naming a beneficiary just happens to also be the most obvious. Most people end up not naming a beneficiary at all for the sake of retirement accounts or even life insurance. This, in the end, defeats the purpose because without a beneficiary, then the financial companies can make their own rules and regulations about where and how your assets are dispersed once you have passed away. This usually results in your family or next of kin have to hire a costly lawyer to receive their inheritance, rightfully so. Now, this is not the case every time someone doesn’t name a beneficiary before passing; it’s just an issue that could easily be avoided if properly taken care of before the fact. 

Not Updating Your Beneficiary As Life Goes On

The only sure thing about life is uncertainty. Well, that and taxes. No one knows what tomorrow will hold or what it will it bring, or if there will even be a tomorrow. All we know is what is happening right here and right now. A variety of things can occur within a week, let alone a lifetime. This is why you have to be willing to update your beneficiary as your life goes on. An assortment of things could happen that could impend the relationship between you and your beneficiary. They could end up in a car accident and find themselves unsuitable to fulfill a beneficiary’s duties. Or maybe they do something so despicable that the relationship between you and them is irrevocable. By no means are we saying that any of these things will happen; all we’re saying is that they could. That is how life works, after all.