The Simple Financial Task That Could Save Your Family Time and Money

When it comes to managing your finances, it’s easy to focus on saving, investing and growing your wealth. But protecting what you’ve built is just as important – and one of the simplest ways to do that is by keeping your beneficiary designations and key financial documents up to date.

At Advance Capital Management, we help people take care of their entire financial lives, not just their portfolios. Reviewing and updating your beneficiaries is a crucial step to ensuring your money supports the people and causes you care about most.

Here’s why it matters – and how we help you make sure everything is set up the right way.

Why Beneficiary Designations Matter More Than You Think

Your beneficiary forms hold tremendous power. In fact, they legally override anything written in your will or trust when it comes to transferring certain accounts after your death.

That means if your beneficiary forms are outdated, your wealth could end up in the wrong hands, regardless of what your estate plan says.

Unfortunately, it’s common for people to leave an ex-spouse, estranged family member or even a deceased person listed as a beneficiary. Failing to update these forms can cause major legal and tax headaches for your loved ones and potentially result in assets being distributed in ways you never intended.

It’s not just personal changes you need to watch for. Financial institutions sometimes update systems, merge with other companies or make clerical errors that impact beneficiary information.

That’s why, at Advance Capital Management, we recommend building regular beneficiary reviews into your financial plan.

The High Stakes of Outdated Beneficiaries

If your beneficiary information isn’t current, you risk:

• Assets being tied up in probate: Without a valid beneficiary, your accounts could be subject to lengthy and costly court proceedings.
• Higher taxes for heirs: Accounts like IRAs may be forced into rapid liquidation if left to an estate, triggering unnecessary tax bills.
• Unintended recipients: Without updates, people you no longer wish to benefit –such as a former spouse – could legally inherit your assets.

Which Accounts and Documents to Review

Beneficiary designations apply to more than just retirement accounts. It’s important to check:

• 401(k), 403(b), 457(b), and other employer-sponsored retirement plans
• Traditional, Roth, SIMPLE and SEP IRAs
• Life insurance policies
• 529 college savings plans
• Annuities
• Transfer-on-death (TOD) and payable-on-death (POD) accounts
• Health Savings Accounts (HSAs)

It’s also a good time to review key estate planning documents such as:

• Wills
• Powers of Attorney
• Healthcare directives
• Trust agreements

Advance Capital Management works with you – and your broader advisory team if needed – to ensure your financial plan is properly coordinated across all accounts and documents.

When Should You Update Beneficiaries?

You should update your beneficiaries anytime there’s a major life change, including:

• Marriage
• Divorce
• Birth or adoption of a child or grandchild
• Death of a beneficiary
• Changes in relationships or priorities

Even if your situation seems stable, it’s smart to review your beneficiary designations every three to five years. Systems change. Institutions merge. Life evolves.

A proactive review ensures that your financial assets stay aligned with your wishes.

Common Pitfalls to Avoid

Here are a few mistakes to watch for when managing beneficiaries:

• Not naming contingent beneficiaries: If your primary beneficiary passes away before you, having no backup can create probate issues.
• Naming minors without a trust: Direct gifts to minors often require court intervention. Setting up a trust can avoid this problem.
• Forgetting about spousal consent: Some retirement plans require spousal approval to name someone else as primary beneficiary.
• Overcomplicating designations: Naming multiple beneficiaries with unequal percentages can lead to confusion if not clearly documented.

At Advance Capital Management, we help you navigate these potential pitfalls, ensuring your beneficiary designations fit seamlessly into your broader financial plan.

How to Update Your Beneficiaries

The process of updating beneficiaries is usually quick and straightforward. Many accounts allow you to review and update beneficiaries online. Others require a short form to be completed and submitted.

Always request a confirmation copy after updating and keep it with your important records.

We work with our clients to simplify this process, helping you make updates whenever needed and ensuring everything stays organized and clear.

Protecting What Matters Most

Growing your wealth is only part of the equation. Protecting it by making sure your financial intentions are clearly documented is just as critical.

That’s why we believe that smart financial planning includes regular maintenance, not just major moves. Helping you stay on top of your beneficiary designations is one of the ways we act as a partner and guide in safeguarding what matters most.

If you haven’t reviewed your beneficiaries in a while – or if you’re unsure whether your documents are up to date – we’re here to help.

Contact us today to schedule a conversation and take one simple but meaningful step toward a stronger financial future.