Are you passing your money on to the wrong person?

by Achieva Financial
Jan January 24

‘Jean’ and her younger brother had the misfortune of losing their mother at the ages of 21 and 18. Their mother had been married but since divorced, and their stepfather was no longer in their lives, leaving them to make their own way at a young age. After her loss, they discovered the beneficiaries of her accounts had never been updated after the divorce and still listed her ex-husband as the beneficiary. Their former stepfather chose to keep the money instead of passing it on to Jean and her brother, and they went without – an outcome they’re certain their mother had never wished for or intended.

There are many cases like Jean’s where accounts have been paid out to ex-spouses or parents because the beneficiaries were not updated. Listing a beneficiary is meant to make transferring accounts over easier and provide tax benefits, but situations like Jean’s can make a difficult time in someone’s life even harder, says Sherri Toporoski, Senior Manager of Achieva Financial.

“People often name a beneficiary when they set up the account, and forget to ever look at it again. Family situations change, and if the beneficiaries aren’t updated as people’s lives change unfortunately their money may not go to who they really want it to.”

In an ideal world, Toporoski says, you should check your beneficiaries every year to make sure they’re up to date. At a minimum, however, there are a few important occasions where you should make certain to review them:

  • Marriage, remarriage or divorce: Beneficiaries don’t change automatically if your marital status changes, so ensure you’re updating them to list the correct person on your accounts. It's not always a situation like Jean’s - savers who got a jump start and set up their accounts young  sometimes list their parents or another family member as their beneficiary, and may want to update it to name a spouse or longtime partner later on.
  • If your beneficiary has passed away. In this case, there will be no beneficiary listed and you may not be taking advantage of the benefits available to you.
  • If you move your accounts to a different financial institution. Transferring an account doesn’t necessarily transfer the beneficiaries along with it – make sure to update them along with the transfer.

Want to check the beneficiary on your Achieva accounts? Simply contact us via secure message or call us.