Update Personal Information

The Importance of Updating Account Beneficiaries and Joint Owners

Designating joint owners and beneficiaries on your CU accounts is one of the easiest and direct ways to pass your assets to your loved ones upon your death, but this only works if the information is current and up to date.

We all have busy lives and sometimes there aren’t enough hours in a day to get everything done. There are also those things that we mean to do, and figure we’ll get to them eventually.

One of the things that should take higher priority is making sure this information is periodically updated. This is especially important when you have a major change in your personal circumstances such as marriage, divorce, birth of a child, adoption or death of a spouse or other close relative.

Joint owner designations are very important. What would happen if you didn’t have anyone authorized on your account and you were in an accident that left you temporarily or permanently impaired? Would you have a way to pay your bills? Who could look out for your financial well being?

When beneficiary information is outdated or ignored it can cause many problems for those dearest to you. The law clearly states that assets in these accounts must revert to the person(s) named on the account agreement. What happens if there is a single beneficiary on your account and that person is dead?  Upon your death your money would revert to your estate and could be subject to probate and unnecessary taxation. What happens if you named your children as beneficiaries, but forgot to update your documents to include those born or adopted after the initial designation? This would cause you to unintentionally disinherit that child. What happens if you have been divorced , remarry and don’t change your beneficiary to your current spouse? Upon your death the money would go to your ex-spouse.

Pension Pickle

One of the most poignant examples of this mistake comes out in a New York Post story back in 2001.  This story tells the tale of Anne Friedman’s nearly million-dollar pension. Anne was a lifelong New York City school system employee. In 1974 she named her mother, uncle and sister on her beneficiary form with the Teacher’s Retirement System. A year later, Ann met and married Bruce Friedman to whom she was happily married for the next 20 years.

During her entire marriage, Anne never updated her beneficiaries.  So after her death,  Anne’s sister was the sole surviving beneficiary and only she had the right to receive Anne’s pension money.  Anne’s sister exercised her right, took nearly a million dollars of Anne’s pension and left Bruce with nothing. Bruce sued, lost, appealed and lost.

The moral of this story, don’t be like Anne. Always update your retirement plan and credit union account beneficiaries, especially after a life-changing event, such as marriage, divorce or the birth of a child. If you don’t, you may end up leaving your loved ones with a broken heart and nothing else.