Written by Adam Summers
We all hope to live and enjoy those retirement years in good health. It would be nice to take that money set aside and travel, pay all the bills off, or simply spoil the grandkids. But, the fact remains that no one is guaranteed the next day, let alone those golden years. So, it is important that your wishes be carried out, even if you are not around to issue a decree in person. Therefore, you need to make sure your retirement savings beneficiary is up-to-date.
Without the Paper
In the event of your death, legal documents will tell the courts how you want your estate divided among the family and friends left behind. For many folks, the bulk of their estate is their retirement savings. After working for 40-50 years, and having a portion taken out of every check, it can be a pretty tidy sum of money.
But, if you do not designate a beneficiary, it is up to the courts to decide who gets your hard earned money. Do you really want a bureaucrat making that choice on your behalf? Probably not! But, if you do not fill out the proper paperwork and keep it in a safe place, your intended beneficiary may never see even one penny of that money.
Up-to-Date
If there is any change in your marital status, family survivors, or friends, it is imperative that you keep that beneficiary information current. If you do not, it can cause the same problems as if you did not name a beneficiary in the first place. In addition, someone that you may not even have contact with anymore will reap the spoils of your years of labor.
For example, if you get divorced, change your beneficiary. In most cases, people usually do not want their ex’s to get their retirement stash, if they have parted ways. But, that is exactly what will happen, if you forget to change the beneficiary and you pass away.
The retirement savings paperwork trumps a will. So, if you have been divorced for 20 years and even remarried, your ex gets that money, if you forget to change the beneficiary. Your family will be paying for your funeral, dealing with all of the expensive issues related to a death in the family, and the ex will be laughing all of the way to the bank.
Another Problem
Another example of serious issues dealing with the distribution of retirement benefits, if you should die, is simply getting married. A single woman names her parents and her siblings as beneficiaries of her retirement, if she should pass away. A few years later, she gets married.
Everything is wonderful; she and he husband get along great. It is assumed that if either die first, the spouse will be the beneficiary, so all of the bills and burial costs can be paid. Unfortunately, the wife forgets to change her retirement beneficiary, even though the couple had a will made several years ago.
Unfortunately, the retirement beneficiary document trumps the will, every time. Decades later, the parents are long since gone, but the sister is still very much alive. So, when the retirement benefits are distributed, she is one very rich lady. The husband shows her the will and explains that he needs that money to pay for the massive doctor bills that have accrued during his wife’s illness. Plus, he needs the money to pay for giving her sister a proper burial.
But, the sister is a bit on the greedy side. She likes having all of that money. She knows that the law is on her side, even though in her heart she knows her sister did not really intend on her having this money. Why should she give it to a brother-in-law that she did not particularly care for in the first place? So, what if he has to sell his home? It is not her problem.
Sadly, even though the husband can show the judge the will that he and his wife made together, the judge’s hands are tied on this one. He cannot make the sister share even one penny of that retirement savings money. She is still named as the beneficiary.
In short, make sure to fill out that proper paperwork, so the law does not have control over your retirement savings, if you should die. In addition, make sure you change the beneficiary, should people and events change your life. If a spouse dies or you get divorced, name someone else. If you get married, you need to change the beneficiary on your savings, because it will trump any other document produced later, even if your current wishes were filed just last week. If you cannot live to spend your hard earned money, make sure the person that does has your blessing.