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Why you should stop procrastinating and name beneficiaries on your accounts (or update them)

A lot of people neglect to name beneficiaries. It could be a costly hassle for your loved ones when you are gone.

DALLAS — A will is one of those things that a lot of us put off as long as possible. All that paperwork, those details, the intimidating legalese, and thinking about dying –they’re all good reasons to procrastinate. 

If you don’t have a will, or even if you do, you should do one simple thing (but you may have to do it several times).

A few years ago, there was an estimate that nearly 60% of people with retirement accounts haven’t chosen a beneficiary. 

When you die and there is no beneficiary—and no will—then your estate may have to go through a probate process. It may be legally expensive, it may get complicated and drawn out, and some of your money may end up going to taxes instead of the loved one you intended.

So, while you’re living, go into your life insurance and retirement accounts and name a beneficiary and a backup (contingent) beneficiary. Make sure the name you put down is complete and correctly spelled. An error can cause a lot of complications.

An important note here from Fidelity and from Vanguard too: If you have a will with different names than the names you list on your retirement accounts as beneficiaries, the names on your beneficiary forms supersede the names on the will. So, make sure that lines up. And check and update these things when there’s a big life event or at least once a year.

It’s not just retirement accounts. You should look into naming beneficiaries for your bank accounts, too. Those don’t require beneficiaries, and usually don’t even ask. But you should ask to name a beneficiary or fill out a payable on death form. Some banks will let you do it online. Others may require you to do it in person.

But as Forbes points out, when you list who inherits the money when you are gone, it makes it a much simpler process for your loved one to go into the bank and get the money after you expire. 

If you don’t name names and there is no will and your estate gets tied up in a legal process, Forbes makes another valuable point: Your money could be used to pay some of your debts instead of going to the person you wanted to leave it to. 

So, again, while you’re living just name your beneficiaries. When you’re gone, the ones you leave behind will thank you.

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