Who’s Your Beneficiary? Why It Is Crucial To Check and Re-Check Your Beneficiary Designations

If you have a life insurance policy, a retirement account or a pension, chances are you were asked to designate beneficiaries. These beneficiaries are the individuals or entities you designate to receive these assets when you die.

Beneficiary designations supersede any directions outlined in a will or trust. Therefore, is it crucial to make sure that these designations are up to date. Specifically, you should re-check your beneficiary designations after a life event such as the birth or adoption of a child, loss of a loved one, marriage or divorce.

Even if you believe your beneficiaries designations are up to date, it is critical that you confirm, in writing, that the life insurance company or retirement account administrator has correctly recorded your beneficiary designations. Unfortunately, beneficiary designations can be “lost”, particularly when a retirement plan is transferred to a new company tasked with holding the account.

If you intend to name a child as a beneficiary, you should identify a custodian for the minor child. The custodian is tasked with maintaining and managing the funds left to the minor. Do not assume that a child’s surviving parent will be able to hold funds on behalf of a minor child. Even if there is a surviving parent, if no custodian is designated, the parent or another adult will need to petition a court to be named as the guardian of the child’s estate in order to receive assets on behalf of the child. This is time-consuming and expensive and places this critical decision in the hands of the courts.

To name a custodian to hold property on behalf of a minor in New Jersey, identify the beneficiary as: “[Name of Adult Custodian] as custodian for [Name of Child] until [Name of Child] reaches the age of 21 under the New Jersey Uniform Transfers to Minors Act”.

To name a custodian to hold property on behalf of a minor in Pennsylvania, identify the beneficiary as: “[Name of Adult Custodian] as custodian for [Name of Child] until [Name of Child] reaches the age of 21 under the Pennsylvania Uniform Transfers to Minors Act”. If you are a Pennsylvania resident or if the child you are seeking to benefit is a Pennsylvania resident, you can you can delay the age at which the child receives life insurance benefits until the child reaches the age of 25 by wording the beneficiary designation as follows: “[Name of Adult Custodian] as custodian for [Name of Child] until [Name of Child] reaches the age of 25 under the Pennsylvania Uniform Transfers to Minors Act”.

Jerner Law Group, P.C. highly recommends that you revisit your beneficiary designations every few years to ensure your beneficiary designations accurately reflect your wishes.