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How to Select a Beneficiary

Chris Gottschalk

Chris Gottschalk About The Author

May 13, 2021 6:15:00 AM

Selecting a beneficiary is as simple as putting a name in a form, but that decision can have huge implications. When you select a beneficiary for an account, such a a life insurance policy, a retirement plan or even checking or saving accounts, you’re deciding who gets the money in that account or policy after you die.

In some cases, that choice can be easy, like selecting your significant other. In other cases, it can be more difficult, like if you have several children you want to provide for even after you’re gone. So how can you make sure you select a good beneficiary?Get Started

They Depend on Your Financial Support

Family | First Alliance Credit UnionThe first question you should ask when selecting a beneficiary is who relies on you financially? Usually the answer will be your spouse or significant other, as well as your children. However, you might also have siblings you are supporting or aging parents, so you might want to name them as beneficiaries too.

If you have multiple people relying on you for financial support, you should know that most policies and accounts will let you select multiple beneficiaries, so you can divide the proceeds up according to who will need the money in your account the most.

They Should be Over 18 Years Old

While children do need your financial support, many insurance plans and retirement accounts won’t pay benefits to someone under 18, since they aren’t legal adults. If you do want to select a child as a beneficiary, your best bet is to set up a trust fund and name a reliable trustee until the child is 18 or older.

They Should be Able to Manage Money

Even if someone you’d like to select as a beneficiary depends on you for financial support and are over 18 years old, they might not be able to manage money well. If this is the case, you should also opt to set up a trust fund and select a more fiscally responsible individual to serve as a trustee and manage the money for them.

They Should be Eligible to be a Beneficiary

Guidelines | First Alliance Credit UnionSome states and insurance companies have their own restrictions on who can and cannot be a beneficiary. These vary from company to company and state to state. While many insurance company representatives will be able to let you know the rules on who their policies will allow as a beneficiary, you may want to contact an attorney to ensure you’re following the state’s rules on naming a beneficiary.

Get Help Managing Your Accounts at First Alliance Credit Union

Selecting beneficiaries for your accounts isn’t difficult, but you should put some thought into who you select to inherit your funds after you’re gone. The people you select as beneficiaries should be of legal age, depend on you financially and be eligible to be beneficiaries according to the regulations of the insurance company or state government.

If you’d like to make sure your First Alliance Credit Union accounts have beneficiaries, contact one of our member advisors. They’ll be happy to look over your account and add a beneficiary to it that you select. You can also open a trust account  to set up a fund that will help manage the money you want  to leave to your loved ones after you are gone.

Want more information? Check out Episode 85 of our Good Money Moves podcast, which talks about designating beneficiaries. Listen Now

We do our best to provide helpful information but we cannot guarantee the accuracy or completeness of the information presented in the article, under no circumstance does the information provided constitute legal advice. You are responsible for independently verifying the information if you intend to use it in any way. Additionally, the content is not intended to be reflective of First Alliance Credit Union’s products or services, for accurate and complete details about our product and service information you must speak to an advisor at First Alliance Credit Union.