MYTH: I don't need to check my beneficiary designations

A friend recently chastised me for having too much political content on this blog.  "Start another blog!", he ordered.  I disagree because every topic I choose for this blog pertains to your financial health, even if only indirectly.  But it's true; I do mostly take a macro, or big-picture view.
So this is a micro issue that can mightily impact you and your family:  Beneficiary designations on your insurance policies, annuity contracts, IRAs, etc.  Always one for source attribution, these were originally published by Dayana Yochim of Motley Fool, April 23, 2008.  But they are still apropo.  And of course I will exercise vast editorial license.

Top Five Beneficiary Form Boo-Boos

1. Assuming your will takes care of all the details.  Beneficiary designations always trump your will.  It's important to be sure these documents agree with one another.  Dayana suggests that if you have a living trust then it should be the beneficiary.  I disagree, unless you want the proceeds paid out in a specific and weird manner.  Naturally, ask your attorney's advice.
2. Subjecting your heirs to an avoidable tax bill.  Failing to name beneficiaries on your IRA robs your heirs of being able to do a Stretch IRA.  With no beneficiaries specified, your IRA will be probated and the non-spouse heirs must  liquidate it within 5 years.  Most heirs don't even wait that long, taking the lump sum and nudging themselves up into the top tax bracket.  And then all subsequent earnings and capital gains will be taxable to boot.
3. Forgetting to update forms when life changes happen.  Probably worse than not naming beneficiaries to begin with is having your money go to someone you no longer like, such as ex-spouses, profligate adult offspring, or "out"-laws.
4. Not having a plan B.  Always name multiple beneficiaries.  If your primary is a single, 100% beneficiary, then name a couple first & second contingent beneficiaries.  If you have just one beneficiary and you both die together in a skydiving accident then the court gets to decide who gets the procedes.
5. Naming minor children as beneficiaries.  This is how I construct beneficiary designations but you want to be sure you have guardianships detailed in your will and/or trust.

Closely Following the News Will Make You a Better Investor

Yesterday, during my lunchtime jog, as the stream of consciousness flowed, snippets of the week's news kept bobbing by.  I never watch the news; why compound the damage?  The only time I ever listen to the news is in the car.  And then only to NPR/FOX.*

"Two men caught in Paris with bomb-making materials"
"The DOW is up 68 points"  (to what, they don't say)
"North Korea launches missile over Japan"
And so on.

Years ago when I would catch a program on NPR my usual response was, "Wow, I'm glad I had time to listen to that!".  Now my usual response is, "What the hell do I need to know that for?"  Or, "I wish I hadn't heard that!".  There are common elements among the newsesque programs which are ubiquitous and that is the editor's desire to fabricate the illusion that:

• We humans rarely get along and, in fact, are normally at one anothers' throats
• The world is dangerous
• I have my finger on the pulse of the world baby! ("The DOW is up 68 points".  I would have trouble coming up with a more useless tidbit.)
• Other people are basically stupid and dangerous
• My "tribe" is superior

This sets us up to be fertile ground for corporate & government intrusion into our lives and the lives of others, driving our focus into the base brain where fear & anger lurk.

On the other hand, I get all the daily news I need in my morning meditation:

• Life is pretty awesome
• People are amazing, essentially loving beings
• The older I get the less I know
• All of us have suffering
• All of us have the capacity to decrease suffering
• In that important respect, we're all the same

So what does that have to do with investing?  Calm & contented investors make better decisions than angry, fearful, suspicious investors.

*Yes, it seems like NPR has adopted the lizard brain focus of FOX

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