How to Designate Beneficiaries for Your Financial Accounts

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Every year millions of dollars of personal assets become subject to the probate process when their owners pass away without specifying beneficiaries. Probate, an expensive and unnecessary procedure, can be easily avoided by specifying a beneficiary for your accounts. Designating beneficiaries is relatively quick and easy, and doesn't require a comprehensive estate plan.

  • Decide who you want to be a beneficiary on your accounts. It can be a friend or family member, your spouse or significant other or a charitable organization.You can name different beneficiaries for different accounts. There are few or no restrictions on who you can choose to receive your money or assets once you're gone.

  • Contact each of your financial institutions where you hold assets and notify them that you wish to add a beneficiary onto your account. You are required to do this whenever you purchase annuities or life insurance in order to establish the policy or contract.

  • Complete the beneficiary designation form that your banks and brokerage or investment firms supply to you and return them for each account. You may need to provide the date of birth and Social Security number for each beneficiary. If your beneficary is an organization, you will need to provide the tax ID number.

  • Specify secondary and tertiary beneficiaries if necessary. This provides you with a backup beneficiary if your primary beneficiary dies or you no longer wish to leave your asset or account to this party.

  • Check your next statement for each account and asset that you own to ensure that your new beneficiary is correctly specified on the account. This will effectively make these accounts "payable on death" accounts, giving the beneficiary access to the account after your death.

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