When should I update a beneficiary?
Designating a beneficiary is one of the first steps in preparing for the future, but it’s not a one-time task. As you move through life’s stages, you may need to revisit and rethink this important decision. Regularly reviewing your beneficiary information will ensure that your future arrangements are always in line with your current wishes. Let’s explore instances when you should review or update your beneficiary information and how to make any changes necessary.
When should I change or update my beneficiaries?
It's essential to review your beneficiaries whenever a significant life event occurs. But what exactly qualifies as a significant life event?
Certain life milestones have a greater impact on your finances than others.
Here are some key moments that may prompt you to review your beneficiary information:
- Birth of a child
- Marriage or divorce
- Salary changes
- Major health or financial changes
- Buying or selling a major asset (such as a home)
- Reaching a milestone age
- Relocating to another city
- Death of a beneficiary
- Change in personal and estate planning goals
Even if none of these life events occurs, you should be reviewing your beneficiaries during your annual financial checkup to make sure you’re still comfortable with your choices.
Which of my accounts require a beneficiary?
When setting up the following accounts, you’re usually given the option to designate a beneficiary:
- Retirement accounts (RPP, RRSP, RRIF)
- Tax-advantaged accounts (TFSA)
- Life insurance policies
- Investment accounts
While this isn’t an exhaustive list of all accounts for which you can designate beneficiaries, these accounts are particularly important because they can offer significant tax benefits and help avoid the additional costs and delays associated with asset distribution.
How do I change or update my beneficiaries?
Updating a beneficiary is simpler than you might think. Each type of account has its own process, but it usually involves filling out a form to make the change. Here are step-by-step instructions on what form you’ll need for each account and where to find it.
You can also review, change, or add a beneficiary online. If you’d like to update your beneficiaries online, check out these instructions on how to do it.
Taking the time to review and update your beneficiaries ensures that your financial plans remain in line with your evolving life. It’s not just about the practicalities; it’s about honouring your hard work, your values, and your wishes and providing peace of mind to both you and your loved ones. By paying attention to these details, you can create a legacy that reflects your intentions, no matter where life takes you.
Important disclosures
The commentary in this publication is for general information only and should not be considered legal, financial, or tax advice to any party. Individuals should seek the advice of professionals to ensure that any action taken with respect to this information is appropriate to their specific situation.