Are the RIGHT People Due to Inherit Your Money?

Okay I must admit, this is not the sort of heading you’d “normally” see – especially, at the beginning of a new year. As I’ve often said many times in the past, in personal financial planning, trendy is not necessarily better.

So here’s a quick question: What, as an investor, do you look for when you review your investment portfolios? Chances are good that you – as most people often do – focus only on the gains or losses to your funds. And usually when your portfolio made gains, everything is great; but, of course, you’re displeased when the opposite occurs. Either way, though, that generally is the end of the review.

Many so-called financial advisors also focus their reviews solely on this “how the portfolio is doing” approach. In fact, do you even remember the last time that you and your advisor reviewed your portfolio? Did that review include an audit of your beneficiaries – the people/entities you have indicated as heirs to your invested funds, should you die today?

As it turns out, life can and usually does get extremely busy. Aside from the million and one things we must take care of on a daily basis, events like marriages, births, divorces, adoptions, and deaths happen – to name only a few – and things get even more hectic. Here’s the thing, though. I believe that these are the exact reasons that every investor must and should perform a review of their beneficiary designations at least annually, and optimally, as soon as a life-changing event occurs.

Let’s Consider a Few Scenarios
Scenario #1: A gentleman remarries shortly after a rather nasty/bitter divorce, but never gets around to changing his beneficiary from his ex-wife (whom, by all accounts, he despises a whole lot). The man unfortunately dies suddenly – and guess who receives the check? Yes, his ex-wife.

Scenario #2: A woman worked for the state government for more than 42 years and passed away just a year before her retirement. She had accumulated a little more than a million bucks in her retirement account, which she opened as a new – and still single – employee, 42 years earlier. Her designated beneficiaries were her mother, father, and younger sister. Although she got married 8 years after starting her job (34 YEARS before she died), she unintentionally (note the keyword, unintentionally) forgot to update her beneficiaries. Long story short, all of the $1 million+ went to her sister, because both her parents had passed away more than a decade earlier. It gets even more windy or interesting – Her sister refused to give even a dollar of the money to the widowed husband.

Scenario #3: A grandfather forgot to update his beneficiaries to include his youngest grandson, who was 2 years old when grandpa died. As a result, his 8-year-old granddaughter received 100 percent of the money. The issue is that the grandchildren are cousins, not siblings, so as one might expect, family dinners have gotten extremely complicated.
And it’s often seemingly minor things like “how” beneficiaries are actually listed on the form that throws things w-a-a-a-a-y off.

Scenario #4: A mother wanted each of her three children to receive a third of her estate, dividing the portions equally. The beneficiary form read “John, Kim and Michael, equally.” Due to the missing comma after “Kim,” the court interpreted the will as intending half for John and the other half to be shared by Kim and Michael – So, John received $150,000 out of the $300,000 inheritance while Kim and Michael split the other half ($150,000) equally for $75,000 each.

You may think that you have things under control or that none of these scenarios even applies to you, but you should probably notice that in each of these cases, the individuals involved must have thought that everything was in perfect order. The only way to be sure that your beneficiary designations are as current as you want them to be is to actually review them.
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Samuel N. Asare is the senior strategist at Laser Financial Group, a regular columnist/commentator for various national and regional publications, author of Proven , Common-Sense Wealth Building blog, and four personal finance books. He holds an MBA and is a Chartered Retirement Planning Counselor, a Charted Mutual Fund Counselor, a Certified Treasury Professional, and a Certified Business Manager. To get more straight-forward retirement insights, visit LaserFG.com, or connect at facebook.com/LaserFG

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Samuel Asare MBA, CRPC, CMFC, CTP

Samuel Asare MBA, CRPC, CMFC, CTP

Samuel N. Asare is the senior strategist at Laser Financial Group, a regular columnist/commentator for various national and regional publications, author of Proven , Common-Sense Wealth Building blog, and four personal finance books. He holds an MBA and is a Chartered Retirement Planning Counselor, a Charted Mutual Fund Counselor, a Certified Treasury Professional, and a Certified Business Manager. To get more straight-forward retirement insights, visit LaserFG.com, or connect at facebook.com/LaserFG.

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  1. Elizabeth Arlen says:

    This is great advice and good information. A friend of mine recently found herself in the same boat because her husband (military man) forgot to change the beneficiary information on his life insurance policy when he divorced his first wife. My friend had just marired him when he went off to Iraq and didn’t come back alive. Now she’s a new bride deceased having to contest his ex-wife claiming rights to his life insurance policy. Please people do your homework. You never know when you are going to die and leave loved ones behind.

    I love this website by the way! Good stuff!

    • Hi, Elizabeth –

      Thank you for sharing another real-life story about this critical subject. So sorry to hear about your friend’s loss. I certainly do wish her all the best in her legal battle.

      I totally agree with you about the awesomeness of this website.