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The Importance of Beneficiary Designation

By: Chelsea Stefanelli, Director - Deposit Operations and Specialized Services

Posted on 10/25/2022 6:48:33 AM

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If you're like most people, you probably think of estate planning in terms of your will and how it can help ensure your loved ones are taken care of after you're gone. But what about beneficiary designations? These form a key part of any estate plan, and they can be especially important if you want to make sure your Credit Union account funds go to the right person or people. So, what are beneficiary designations, and why should you care? Keep reading for everything you need to know.

What is a beneficiary?

A beneficiary is a person or entity you designate to receive the funds in your account after you die. Beneficiaries typically include family members, friends, charities, and other organizations. This designation could allow your money to be transferred directly to them without going through probate.

Beneficiaries are not required on your accounts at Community First, but they could prove a vital addition to ensure your loved ones are taken care of should something happen to you.

Can I name more than one beneficiary?

Yes, it is possible to name multiple beneficiaries for an account. All beneficiaries you name will receive an equal share of any remaining assets.

What rights does an account beneficiary have?

While you're alive, your financial accounts are your property and are inaccessible to your named beneficiaries. An account beneficiary only has the right to access funds in an account after the death of the primary account holder. Beneficiaries cannot make deposits, withdrawals, or change other details on the account. To access funds, beneficiaries will need to provide a copy of the deceased’s death certificate and their identification to the Credit Union before they can receive the funds.

However, if an account or Credit Union membership has joint owners, beneficiaries will not have access to the account until all named owners are deceased.

How do I add a beneficiary(s) to my account?

Adding a beneficiary to your account is simple. You can do this at any time by visiting any of our branch locations or by calling our Member Experience Center at 904-354-8537. Our team members will assist you with completing a Beneficiary Designation Form.

Once this form has been completed, make sure to periodically check the beneficiary information on file for accuracy. If any changes need to be made, please update your Beneficiary Designation Form. Once you've filled in the necessary paperwork and provided all required documentation, your beneficiaries will be listed on your account record.

How often do I need to update my beneficiary(s) on my account?

We recommend that you review and update your beneficiary(s) at least once a year, especially after a major life event such as marriage, divorce, or retirement. It's important to make sure the information is accurate in the event of your death, so any changes need to be updated as soon as possible. You'll want to stay ahead of any changes so your wishes are honored should something happen.

If you want to make changes to an existing beneficiary designation, you'll need to complete a new Beneficiary Designation Form. Upon submitting the form, all existing beneficiaries will be removed and replaced with the current beneficiaries listed on the new form.

Remember to check up on the beneficiaries for all your accounts, including your Credit Union membership; other checking, savings, and retirement accounts; stocks and investments; and any employer-sponsored or independently purchased benefits. Keeping all of these accounts up to date will ensure your affairs are settled expeditiously and in line with your wishes.

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What happens if I don’t name a beneficiary?

If you do not designate a beneficiary, your assets will typically be distributed according to the laws of intestacy in your state. This means that your estate may go through probate court, during which time it can take a long time for your loved ones to receive the money.

Naming a beneficiary on your accounts ensures that your loved ones will receive the funds quickly, with as little hassle as possible. It's important to take the time to make sure your beneficiary designations are up-to-date and accurately reflect your wishes.

The Bottom Line

By naming beneficiaries on your accounts, you can ensure that your assets are distributed according to your wishes and avoid the expense, delay, and paperwork of probate. Naming beneficiaries is a great way to provide for those who matter most in life without having to go through the time-consuming process of estate planning. It's important, however, to review beneficiary designations periodically in case there have been changes in family or financial circumstances.

It's also important to know that beneficiary designations may supersede any instructions given in a will. For this reason, it's essential to keep track of all accounts and make sure the beneficiaries reflect your wishes for each one. With careful consideration, you can ensure your assets are distributed correctly after you've gone.

* This guidance is not to be used in the place of legal advice. If you have questions specific to your estate or legacy planning, please consult your legal counsel.

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