One of the most common omissions that people make in their financial planning is to review their beneficiaries every year or so. Choose a specific date and make yourself a reminder, along with a list of your holdings and take the time for a review. If you have a financial advisor, review your beneficiaries with him/her. Make a list of all of your insurance policies, your bank accounts and your investments. Make sure that the person(s) listed as beneficiaries is still appropriate.
Remember that if you name someone as a beneficiary, you are giving them that asset to do with as they wish. Even if you give verbal instructions such as “use this for my final expenses and keep what is left over…” when the beneficiary receives that asset, they are not required to follow your verbal instructions. This is a reason to have a separate funeral trust that pays the funeral home first. By using a funeral trust, you are not burdening a beneficiary with the duty to pay for your final expenses if they want/wish/need to use the money for something else.
What can happen unintentionally
I once helped a young lady, age 19, plan her father’s funeral. He had died very suddenly, and she was his only surviving relative. I’m sure at age 50, he either had not considered making his final arrangements, or believed he had plenty of time to do so. His daughter was left with the emotional burden of making all of the decisions, and the financial burden of paying for the funeral – why? Because his only life insurance policy still had his 2nd ex-wife, who was not his daughter’s mother, named as the beneficiary. Because of hard feelings, the 2nd ex-wife, not only kept the proceeds of the insurance policy for herself, but literally waved it in the face of the daughter, “ha, ha, ha…I got it and you didn’t!” Security had to be called to the funeral to keep this lady out. I’m sure this dad would not have purposely left his daughter in this horrible position, but by not updating his beneficiary on his insurance policy, he unintentionally did just that. Just so you know, this young lady’s mom (1st ex-wife), stepped up and supported her daughter emotionally and financially. Not everyone has that person, and not everyone in that position is able to help, especially financially.
Consider this very carefully and review and calendar the next review of the beneficiaries on all of your policies and accounts. Don’t leave your loved ones unprotected emotionally or financially. If you have questions, call for assistance. Essential Arrangements can help you.