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Mistakes made on your beneficiary forms could prove costly for your loved ones or worse caused your assets to be split in ways you never intended. So in today's video I'm talking about mistakes that you might be making with your beneficiaries. These are mistakes that I see over and over and over again. The good news is is that you can rectify these mistakes. It's just a few little steps to do that. Taking the time to review your beneficiaries, make sure that they're all in line. Hi there, my name is Ashton Micciche, CEO and co owner of True North Retirement Advisors where we help business owners transition into retirement and successfully exit their business. Okay, so let's take a look at beneficiary mistakes. This is a video I've been wanting to do for a really, really long time because I see these mistakes made over and over and over again. Mistake number one that I see all the time is that a lot of clients assume that their will has them covered. Like, it doesn't matter what I put on my beneficiary forms, my wills all taken care of and my will spells out who gets that money. Or worse if you name your estate as your beneficiary. So first of all, I want to address the first problem, which is assuming your will has you covered because it does not. Whatever you put as your beneficiaries, it doesn't matter what your will says, whatever you put as your beneficiaries on your IRAs form, your transfer on death accounts, your life insurance policies, whatever you put for those beneficiaries, in most cases it's going to override whatever you put on your will. Your will could say something completely different than what your beneficiaries on your policy or your account and whatever your beneficiary say is, that's where that money's going to transfer to upon your death. So be careful about that. Okay. Then the other mistake that I see related to your will and your state in this area is that sometimes people will actually name their estate as the beneficiary. This often a tremendously detrimental thing to do for a couple of reasons. Okay. One is that let's say you were married but your spouse passed away and now your beneficiaries are your two kids. But instead of naming them as individuals, as beneficiaries, you name your estate, okay, here's where the problem comes in. If you name your estate, that IRA money will not transfer directly to them. In most cases, when you name a child, they get to open and transfer your IRA money or 401k money into a, what's known as an inherited IRA. And what this allows them to do is allows them to, to stretch that money out. They can continue to invest it, they can continue to allow that money grow, and importantly, they don't have to pay the taxes up front. If you name your estate that you, you're not going to allow for that tax free growth to continue and they won't be able to open the inherited IRA. They'll pay the taxes on it once and then it'll be done. So they give up a huge tax benefit to letting that money continue to grow. They also give up the growth potential from letting that money continue to grow. Now, of course I am not an attorney, nor do I play one in this video. So very important for all of these points that I'm making. Be sure before you do anything to always consult your a state attorney and don't be penny wise and pound foolish because mistakes made on beneficiaries and not coordinating those beneficiaries with the rest of your estate. Documents can prove extremely costly, as I've already talked about and as I'll continue to talk about in this video. So mistake number two is not understanding the beneficiary pathway. So I want you to assume that it's just you have not named your spouse as beneficiary is your spouse has either passed away or you're divorced, but you have four kids and you name each of those four kids as 25% beneficiary. So if you die, your, your money gets split four ways across each of your children. Now I want you to assume, I know we don't like to think about this, but I want you to assume that one of your children passes away. What do you want to have happen with that child's portion of your IRA with their 25% do you want the other three beneficiaries to receive their portion or do you want the deceased child's portion of those assets to pass to their children? So what I'm talking about here is the difference between per stirpes and per capita beneficiary designations. There's a couple of ways you can do it. One way will pass to the heirs of that deceased child. The other way we'll pass to the other three remaining beneficiaries that are your children to take the time to sit down with your estate attorney, with all of your wills, your trust, all of your estate documents. Those should also include your beneficiaries. So it's important to get their guidance on based on what your intentions are with your assets on how you should be completing those beneficiary forms. The mistake number three that I see all the time too often is failing to update your beneficiaries after four specific trigger events. Now there are more than this, but these are the big four. Okay, so we have death, divorce, remarriage, and birth. These are the events that should really trigger you to review and update your beneficiaries. Okay, so let's start with death. Death is probably the most obvious one. And so if someone, one of your beneficiaries, whether it's a primary beneficiary, like maybe it's your spouse or if you have a child or some other beneficiary that you've named, if they die, you're definitely gonna want to update your beneficiaries so that you don't have as many issues with the problem that I talked about in the last mistake, which is not understanding the beneficiary pathway, especially if one of those people dies. Now the second one is divorce and this is a really interesting one because a lot of people forget to update and remove their spouse after a divorce. Like you've been married to this person for like 25 years. They got divorced 30 years ago, but they forgot to update their beneficiary forms. So they still had their last spouse on their beneficiary form and not you. Okay. So it's very important both when you get divorced, when you sever those ties with the previous spouse, and then when you remarry to review and update those beneficiary forms so that your assets don't get split in ways that are inconsistent with what you expected to have happen and especially what your existing spouse expected to have happen. So when someone is born, you have children, you have grandchildren, you may have a favorite niece of yours that you want to include as a, as a beneficiary. And so it's really important to make sure that you, because you are naming those specific people in your beneficiary form is super important that you update that when new people enter into your life. And I see a lot of people make a mistake that sort of related to this as I think that because our minor, because our child that they can't name them as a beneficiary. No, you can, you just have to name someone who's going to oversee those assets until they become an adult. So just be sure that you're keeping up with those beneficiary changes as you have, um, children who are born or grandchildren or other people that you wanna include who are special to you and you want to give them a little something after you pass. Okay. So there you have it. The three most common mistakes that I see easily avoidable, assuming your will has you covered or worse, naming your estate as a beneficiary, not understanding the beneficiary pathway. And then third, not updating your beneficiary forms for those for trigger events, death, divorce, remarriage and birth. If you have questions about your beneficiary forms or or, uh, understanding that beneficiary pathway, especially if you're a client of true North, give us a call at, you can call us at (503) 387-6869 or if you go to our website, true North R h.com. A right there on the home page is a link to book a call where you can schedule a 15 minute call with me and I can answer any questions that you have. Thank you so much for watching. My name is Ashley Mitcciche and I will see you next week. Oh. And be sure to like comment and subscribe to our channel. We put out new videos every single week, all around the theme of retirement and exit planning to help you transition into the next phase of your life prepared. All right. Thanks so much for watching and I will see you next week.