Your Financial Life Changed. Did Your Setup?

In 1987, Jeffrey Rolison named his girlfriend as the beneficiary of his retirement account. They broke up two years later.

He never changed the beneficiary.

When Rolison died 26 years after their breakup, she was still the beneficiary. The account had grown to more than $1 million, and the courts ruled she was entitled to it.

You would think a story like that would be unusual, but versions of it keep ending up in court as relationships end, families change, and old beneficiary designations stay in place.

How could someone build significant wealth, create a will, move on with their life, and still have an old name sitting on a retirement account?

Pretty easily, actually. Once we make these decisions, most of us don't look at them again unless something forces us to.

I've been thinking about this lately. I've been reviewing our own umbrella policy, while a few people have asked me to serve as executor for their estates. Both have put a spotlight on the financial decisions we make once and rarely revisit.

Before setting another financial goal for next year, ask yourself:

What financial decisions did I make years ago that I haven't checked since?

This post:

Our financial lives usually start out pretty simply. Over the next 20 or 30 years, we change jobs, build families, buy homes, open accounts, start businesses and invest.

By our 40s and 50s, there is a lot more to keep track of. Americans now hold about $30.7 trillion across 401(k)s and IRAs, according to the Investment Company Institute.

That is a lot of wealth sitting in accounts where the beneficiary designation can determine who gets the money, even if your will says something different. It is also worth naming a backup beneficiary in case your first choice can't inherit.

Beneficiaries are only one example. Insurance, trusts, LLCs and tax decisions can all stay the same while your life changes around them. What made sense when you set it up may not make sense anymore.

Start with beneficiaries, but also look at the rest of the plan.

A few people have recently asked me to serve as an executor or financial sounding board for their families, and it has made me think more about what I would actually need to know if I ever had to step in.

I would want more than a list of accounts and beneficiaries. I would want to understand what matters to them, what they are trying to protect, and any family dynamics.

If you're asking someone to take on that role, make sure they know enough about your financial life that they wouldn't be starting from scratch.

As assets grow, the question becomes: does the coverage still fit what you own and the risks you have today?

That might mean looking at umbrella liability, homeowners coverage, disability insurance or other protection you put in place years ago. A more valuable home, rental properties, teenage drivers or higher income can all change the picture.

Over time, the accounts and income streams start to pile up. A 401(k) here, an IRA there, a brokerage account, rental income, consulting income, private investments or a business.

At some point, it is worth asking whether your tax setup still makes sense.

Are you keeping the records you'll need for cost basis? Have new income sources changed how you should be paying taxes? Does your CPA know about everything?

LLCs, partnerships and properties all need some upkeep.

That may mean annual filings, separate books, licenses or keeping partnership agreements current. If you have a partnership, make sure you both know what happens if one of you wants out, becomes incapacitated or dies.

The trigger isn't always time. Often, it's change.

A new job, marriage or divorce, a child leaving home, a new property, a business, or a big shift in income or assets can all be reasons to revisit decisions you made earlier.

Taxes, insurance and business filings still deserve regular attention. But for many other decisions, a life change is the better cue.

Building wealth feels more rewarding than maintaining it.

If you invest another $10,000, you can see the number go up. If you buy another property, there is something tangible to show for it.

Updating a beneficiary, checking your umbrella coverage or pulling out your trust doesn't feel like progress in the same way. So it gets pushed down the list.

And once a financial decision is made, it tends to stay there. Something that made perfect sense at 35 can still be in place at 50, even if a lot has changed since then.

A good financial decision can have an expiration date.

Year-end is a good time for a little financial cleanup.

Pick one thing you haven't checked in a while: a beneficiary, an umbrella policy, the names on your estate documents, an LLC filing.

Or just ask — if I couldn't handle my finances tomorrow, would someone know where to start?

If something makes you think, I honestly don't remember the last time I checked that — start there.

Before you add another financial goal for next year, make sure the financial life you've already built still fits the life you're living now.