As we know, life moves fast. And as the days go by in a blur, updating your list of (or even designating) your beneficiaries can fall to the bottom of your proverbial “to-do” list.
With events such as divorce, marriage or even the birth of a child or grandchild, many events can occur in life that can prompt the need to update beneficiaries.
In general, a beneficiary designation is a way to efficiently pass assets to loved ones. It allows you to transfer certain assets, such as the proceeds of your life insurance policy, a 401(k) or IRA to whomever you want, without going through the probate process.
Listed below are some of the most common questions and facts regarding beneficiary designation and why they’re so crucial to your financial life.
• Who can be my beneficiary? The answer here can vary depending on your current financial situation. If you are single, you can choose anyone you wish. If you are married, your spouse is traditionally chosen as the primary beneficiary. In fact, in some states, you are required to select your spouse as your primary beneficiary on retirement plans or receive consent to name someone different. You also have the option to choose a charitable organization of your choice or name a trust.
• Don’t wait. It’s easy to postpone or procrastinate updating or changing your beneficiaries on old life insurance policies or your 401k from your current or previous employer. If you are reading this article, use this opportunity to remind yourself there is no better time than right now. If you decide to wait and tragedy strikes, your assets may not transfer to whom you wish. Beneficiary designations supersede your will. As an example, if your will lists your current spouse to inherit your IRA, but the primary beneficiary listed on the account is your ex-spouse, then these assets would go to your ex-spouse.
• Don’t forget per stirpes. Most people see that little box on beneficiary forms labeled “per stirpes” and ignore it because they don’t know what it means. With per stirpes, in the event your beneficiary does not survive you, but leaves surviving descendants, any share otherwise payable to that beneficiary shall instead be paid to that beneficiary’s surviving descendants.
• Avoids probate. Probate is the judicial proceeding by which the courts oversee the distribution of your estate and interpretation of your will. Probate can be a lengthy and costly process for the parties involved and it can take sometimes up to a year or more for the process to finalize. Also, probate records are open to the public, so essentially, anyone could see how you left your estate — which most people would like kept private.
Keeping your beneficiaries up-to-date to reflect the changes in your life helps ensure your legacy goals are met. As with any important financial decision in your life, discuss your unique situation with your financial adviser to determine which options are right for you and your family.

Nicholas Ibello is wealth manager and associate vice president; and Gary S. Williams, CFP, CRPC, AIF, is the president and founder, of Williams Asset Management, in Columbia. They can be reached at 410-740-0220, or at [email protected] or [email protected].