Myth: Your will designates who gets your money when you die. Fact: With most financial assets — life insurance, an IRA, a 401(k) or a savings account — you have to designate a beneficiary with your insurer (or investment company, or bank). This trumps whatever you say in your will regarding your assets, so it's important. And while it's never fun to think about dying, this is really about helping your loved ones: Naming beneficiaries and keeping them updated means they don't have to guess about what you might have wanted. Luckily, it's pretty easy.

This is for you: If you're buying life insurance, opening an IRA or signing up for benefits such as a 401(k) or group life insurance at work.

Hands-on time: Less than 15 minutes once you've decided who to designate

Total time: Less than 15 minutes unless you have a sizable estate (over $1 million) and need to consult with an attorney.

The basics:

• You can name individuals, such as family members or friends, or a business or charitable organization.


• There's a primary beneficiary and a contingent beneficiary. The contingent beneficiary receives assets only if the primary beneficiary is deceased when you die.


• You can also name multiple people or entities for your primary and contingent beneficiaries and note what percentage of assets should go to each. So, for instance, if you're single and you'd like your life insurance at work to be split between your parents, you'd name them both as primary beneficiaries, each receiving 50 percent of the assets.


• You can name a minor as a beneficiary, but you should have a will that appoints a trustee to manage all funds received by minors until they reach a designated age. (Like 18.)

What you'll need:

• Your beneficiaries' full names


• Their contact information


• Their Social Security numbers (or tax ID numbers if it's a business or organization)

What to do:

• Decide on primary and contingent beneficiaries. (Your mother, your spouse, your favorite charity, etc.)


• Gather your beneficiaries' contact info (names, addresses, phone numbers), Social Security numbers for individuals and tax ID numbers for organizations.


• Fill out the "beneficiary" part of the forms you're completing.


• Keep a copy in your files.


• Update all beneficiaries when major life changes occur: marriage, divorce, births, adoptions, deaths, etc.


• No matter what, review your beneficiaries every three to four years.


• There's no need to alert your beneficiaries, unless you want to.

What not to do:

• Leave it blank. If you don't have a will, these assets will probably default to relatives based on the laws of descent and distribution for your state.


• Name an estate, will or a trust. There are more unfavorable tax consequences than naming a person or charity.


• Name a deceased person. (Come on, now.)


• Name a special-needs person. You may impact their ability to maintain government benefits. Talk to an elder law or financial planning attorney if you want to do this.


• Name a non-specific beneficiary. Some forms allow you to choose something like "My husband at the time of my death" rather than just naming your husband. It seems like a good catch-all, but it can increase the chance of someone contesting the designation.

To learn more:

• The Benefits of Naming Beneficiaries (Bankrate)
• 5 Things to Know About Naming Beneficiaries (CNNMoney.com)

Who helped: John S. Young, Attorney at Law, Mt. Prospect, IL


Did you do it? Tell us what worked or share other tips in the comments below.


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Related Links:

How to get life insurance

How to rebalance your 401(k)

How to open a traditional IRA