TLDR: Actionable Advice for Naming Your Beneficiaries

Setting up beneficiaries is a crucial step in managing your wealth, and the best part is that doing it right is almost always free. Below is a quick, actionable guide from Buffalo First Wealth Management on what you need to do to ensure your assets are passed on exactly as you intend.

1. Add Beneficiaries to All Your Accounts

Many people overlook adding beneficiaries when opening new accounts. Take a few minutes to log in and update the following:

• Retirement Plans: 401(k)s, 403(b)s, and simple IRAs.
• Personal Investments: Roth IRAs, traditional IRAs, and brokerage accounts.
• Bank Accounts: Ensure any single-name bank accounts have a listed beneficiary so funds can be accessed immediately in an emergency.
• Insurance Policies: Double-check your life insurance and any other relevant policies.

2. Understand Primary vs. Contingent Beneficiaries

When setting up your accounts, you will be asked to name both primary and contingent beneficiaries.

• Primary Beneficiary: The person (or people) who will directly inherit the account.
• Contingent Beneficiary: The backup. If your primary beneficiary passes away before you do, the contingent beneficiary inherits the account.

3. Choose Between Per Stirpes and Per Capita

These Latin terms dictate how assets are divided if one of your beneficiaries passes away.

• Per Stirpes: If a beneficiary dies, their specific share is passed down to their heirs (e.g., your grandchildren).
• Per Capita (Per Head): If a beneficiary dies, their share is distributed equally among your remaining living beneficiaries.

4. Consider a Trust for Complex Situations

While naming a beneficiary is free, you may need to pay an attorney to set up a trust if you want to control how the assets are distributed. A trust is highly recommended if your beneficiary:

• Has special needs or is disabled (to avoid jeopardizing their Social Security or Medicaid benefits).
• Struggles with substance abuse.
• Has a history of poor money management.
  Once established, the trust itself becomes the beneficiary, allowing funds to be parsed out responsibly over time.

5. Review and Update Annually

Set a yearly calendar reminder to review your beneficiaries. Major life events like births, deaths, and divorces should trigger an immediate review. Failing to update your accounts could result in your assets going to an ex-spouse.

6. Remember: Beneficiaries Supersede Your Will

This is a massive misconception: your will does not override your beneficiary designations. If your will states that your current spouse gets everything, but your ex-spouse is still listed on your IRA, the ex-spouse gets the IRA. Always update your beneficiaries alongside any changes to your will.

Stay tuned for our next post.