Beneficiary Audit

Do you want your ex-spouse to get your money when you die? Or how about someone that’s fallen out of your good graces? No matter what your will says, the beneficiary form you signed is the gospel truth, written-in-stone, irrefutable, go-to document that will be used by the court to distribute your assets. And if you forgot to name a new beneficiary after a change in family status, somebody is just plain out of luck.

That issue has been argued all the way to the U.S. Supreme Court. DuPont Company paid a deceased employees $402,000 pension to his ex-wife, even though she waived her rights to it in the official divorce decree. The man’s daughter sued DuPont to recover the money. But Supreme Court Justices voted unanimously in favor of DuPont because the ex-wife’s name was the only name on the beneficiary form.

Forgetting to change beneficiaries is one of the most common retirement and estate planning mistakes people make. And it can be incredibly costly for the people you want to benefit from your estate. A beneficiary audit of all your accounts with named beneficiaries can eliminate the problem.

It’s a good idea to audit your beneficiaries once a year, or at a minimum when there are life changes such as marriage, divorce, the birth of a child or grandchild, one of your beneficiaries predeceases you, or if you change your mind about who you want to receive some of your assets. You also need to review your beneficiaries when the administrator of your company retirement plan changes systems. Sometimes all information does not transfer.

There are several types of accounts with named beneficiaries:

  • Life insurance policies – Don’t forget policies through your employer
  • Bank accounts – Bank and brokerage accounts can be set as TOD (Transfer On Death) to avoid probate.
  • Retirement accounts – IRAs, 401(k)s, 403(b)s, SEPs, SIMPLE IRAs, TSPs
  • Investment accounts – Again, TOD designations can simplify estate planning.
  • Deferred Compensation Employer Plans
  • 457 Government Plans
  • Annuities
  • Health Savings Accounts
  • 529 Education Savings Plans
  • Pensions
  • Trusts

Special situations should also be taken into account. If one of your beneficiaries is a minor, for example, you will need to name a custodian or trustee.

You might also need a trust for beneficiaries who have special needs or who lack the skills to manage the assets themselves. A trustee can protect the assets and distribute them in a manner that is in the beneficiary’s best interest.

In addition to all the other benefits of a beneficiary audit, a review can also save on estate and/or income taxes, avoid legal difficulties, and provide for the well-being of your desired beneficiaries. Remember, it’s your responsibility to keep your beneficiary designations correct and up-to-date.

If you would like help with a beneficiary audit let us know. Contact us at info@alhambrapartners.com.

2018-06-05T16:50:02+00:00

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