Tips for filling out beneficiary designation forms

by Center for Personal Finance editors

MADISON, Wis. (1/23/07)--If you recently married, divorced, had a baby, or experienced a death in the family, it's time to review your beneficiary designation forms--but make sure you fill them out correctly (Credit Union National Association Center for Personal Finance).

It's your responsibility to keep beneficiary forms current--changes in family status don't automatically change a previous beneficiary form. If you forget to take your ex-spouse off an old form, that person still could receive benefits you previously designated.

On the form, name primary beneficiaries (persons, corporations, organizations, trusts, or an estate) as well as contingent beneficiaries (a different person or entity who will receive your proceeds if the primary beneficiaries die or--if it's an entity--cease to exist). If you name more than one beneficiary in each category, designate a percentage or fraction to each beneficiary, all of which must add up to 100% or 1.0. (opm.gov).

Some examples of accounts that require a beneficiary designation include retirement accounts, life insurance policies, pensions, and annuities.

Follow the rules so your money goes where you want it to go:

Do:

• Use full, legal names (for example, Susan L. Smith, not Mrs. Robert G. Smith);
• Make copies of the form for yourself and your beneficiaries;
• Fill out the form in pen; and
• Spell out what would happen if a beneficiary dies.

Don't:

• Name the same person as both a primary and contingent beneficiary;
• Cross out or white out names on the form;
• Use a beneficiary designation form to update a beneficiary's address (a signed letter is sufficient); and
• Leave anything directly to your children if they are still minors. Instead, leave it to your children's guardian to be held in a custodial account.

For more information, read "Eight Essential Estate-Planning Steps" in Home & Family Finance Resource Center.

Printed Monday, September 8, 2008

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