Q&A with Jesse Bopp, Vice President, Alpine Bank Wealth Management

Jesse Bopp, Vice President, Alpine Bank Wealth Management

Q: What do I need to know about designating beneficiaries on my financial and retirement accounts?

A: To correctly designate beneficiaries on financial and retirement accounts, consider the following:

  • use the official form provided by the bank or financial institution;
  • name primary and secondary (contingent) beneficiaries;
  • use caution if listing minors (beneficiaries who are not adults) on an account, or if listing someone other than your spouse on a 401(k) or IRA;
  • check to update your designations following a major life event; and
  • ensure designations on your financial accounts do not conflict with designations in your estate documents.     

Designating beneficiaries on financial accounts can be a good choice to pass assets at death, without the need to probate or create a trust. When designating beneficiaries on a financial account, use the official form provided by the financial institution. By doing so, you ensure proper process and compliance by the institution.

It is often appropriate to name a primary beneficiary and one or more secondary (contingent) beneficiaries. Perhaps the primary beneficiary is a person who pre-deceases you or an organization no longer in existence upon your passing.    

Naming a minor requires caution since a minor cannot directly inherit funds in a retirement or bank account; instead a custodian or trustee will need to be appointed to administer the funds until the child reaches adulthood per state law or some event occurs as identified in the governing document. When naming minors, a custodial account such as a Uniform Gift to Minors Act (UGMA) account or a Uniform Transfers to Minors Act (UTMA) account may be an option, over forming a trust. Check with your financial advisor or estate attorney for what is best for you since law can vary by state, and there may be tax and estate considerations specific to you.

Employee benefit plans, such as a 401(k), have special rules as well. For instance, Federal law states your spouse is entitled to fifty percent of the funds in your 401(k), whether or not you name your spouse. To name someone other than your spouse as a beneficiary of your 401(k), you must obtain a signed Spousal Waiver, where your spouse acknowledges he or she is giving up monies to which they are legally entitled. In contrast to employee benefit plans, Individual Retirement Accounts (IRAs) differ by state law.

Once you designate beneficiaries across financial accounts, please update those designations as needed. For instance, if you have a life-changing event, such as marriage, divorce, or the birth or death of a family member, update your account designation as needed.

Finally, remember to compare designations on your financial and retirement accounts with any designations made in your will or trust. You want to ensure the beneficiaries are properly designated, and the accounts and documents do not conflict with each other. For example, if your will names certain beneficiaries, but your bank accounts are jointly held with another or are held in trust, the monies may not be payable to your will. Or, if your financial account designates a beneficiary that is different than named in your estate documents, the designation named on your financial accounts will prevail over those named in your estate documents.

Alpine Bank Wealth Management views beneficiary designations to be an important part of your financial and estate planning needs.

Contact Jesse Bopp to learn what Alpine Bank Wealth Management can do for you. Call him at 877-808-7878 or email him: [email protected]

Products of our Wealth Management service are not FDIC insured, may lose value and are not bank guaranteed.

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