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How do you include proceeds from a retirement account in your will?

On Behalf of | Dec 14, 2022 | Blog, Wills & Estates

It is possible to leave the money remaining in a retirement account to your heirs after you die. However, you must handle these proceeds differently than other property and assets you might own.

Retirement accounts allow you to designate a beneficiary when you are first setting them up. Because these beneficiary designations replace information included in your will, you must ensure you perform the process correctly. Here are a few things to keep in mind.

Choosing a beneficiary

Beneficiaries can be anyone you choose but are typically members of a person’s immediate family. You can name a single person or a group of people who will receive a portion of the money within the account. You can specify a percentage of the assets each person will receive, or you can request to split the funds equally.

Selecting contingent beneficiaries

In addition to your main beneficiaries, you can also pick contingent or backup selections. These people will receive funds if one or more of your original selections are no longer available. Much like the primary selections, you must list each contingent selection and how much of your retirement funds they should receive.

Informing your beneficiaries

After making selections, sit down with your heirs and inform them of your decisions. Make sure they have access to the necessary documents and information to get their funds after you die. For instance, you should give them the name of the company that manages your retirement account, as well as the name of the account manager or contact.

Additionally, you must review your selections regularly to ensure they still meet your needs. Along with performing a review every few years or so, you should also assess your entire estate plan after major life events like marriage, divorce, or the birth of a new child.