When you open an investment account, it's typically required that you name a beneficiary. This is the person who will receive the funds left in your account after you die.
While it's common practice to designate a beneficiary for investment accounts, life insurance policies or individual retirement accounts, it's less so for basic checking and savings accounts. It's not required to name the recipient of these funds, but it may be wise to do so anyway.
Probate is the process of proving a will after death. It's not inherently a complex process, but it can become so for a variety of reasons. If a will is complicated, or if a loved one contests it, probate can quickly become time-consuming, expensive and stressful, Nerdwallet explained.
Fortunately, there are actions you can take that will help your family avoid the probate process after your death. Naming beneficiaries on your financial accounts is one of them.
Legally, the beneficiaries on your financial accounts take precedence over your will. Naming beneficiaries makes it clear whom you want to inherit specific assets when you die, and can help your loved ones avoid fights within the family.
If there is no beneficiary named on an account, the funds it holds are directed to your estate after you die, according to Bankrate. It might then be used to settle claims or pay bills, ultimately decreasing the amount available for your survivors.
When there's a beneficiary listed on the account, that person will receive the money first, rather than having it shuffled into your overall estate.
It's possible that you've already listed beneficiaries on your financial accounts, or that you included instructions for how to handle your finances after death in your will. However, if your family has changed since then, through marriage, births, divorce, death or something else, the current state of these documents may not reflect your wishes.
It's smart to review your will and the beneficiaries on your accounts annually or every other year. This way, you can make changes that reflect any familial changes that impact how you want your finances to be distributed.
You may also want to dedicate a portion of your remaining finances to a charitable organization that you choose to support. You can name charities as beneficiaries, making it simple for the organization that you care about to receive the donation in a timely manner.
You can name multiple beneficiaries to your accounts. Some people choose to split funds between their spouse and children, a parent and spouse, a loved one and a charity or another combination.
Finally, you may name contingent beneficiaries. These are people who will receive the funds in the event that the primary beneficiary can't or won't accept the money.
Adding or changing beneficiaries is a fairly simple process, involving a form that you'll turn in to your financial institution. Some banks provide online resources that allow you to fill out the necessary paperwork online. Others require you to complete these forms in person.
Reach out to The Federal Savings Bank to learn about how to add beneficiaries to your accounts.