Do Your Beneficiaries Know?

Assisting with estate planning is one of the valuable, though often overlooked, services we provide.

We help ensure that you have a proper estate plan in place.

This including a will, directives, and designating beneficiaries for financial accounts. These beneficiary forms, which are filled out for IRAs, workplace retirement plans, and life insurance policies, can give peace of mind about the eventual transfer of your wealth.

We help you review your beneficiary decisions.

For example, say you opened an IRA in 1997. Your life has probably changed quite a bit since 1997. Were you single then, and are you married now? Were you married then, and are you single now? Have you become a parent since then? If you can answer “yes” to any of these questions, then it’s time to review beneficiary forms.

Here is a quick look at details of how beneficiary decisions play out for a few of the most popular retirement accounts.

• Employer-sponsored retirement plans. In general, retirement accounts such as a company 401(k) plan or government retirement plan tend to go to the spouse. Naturally, other rules apply in more complicated situations, and we’d be happy to discuss those with you if that is of interest.
• IRAs. Unlike an employer-sponsored retirement plan, a spouse does not have automatic beneficiary rights with an IRA. That is because IRAs are governed under state laws rather than ERISA. One interesting estate planning aspect of an IRA rollover is that the owner of the new IRA has the freedom to name anyone as the primary beneficiary.¹ 
• Life insurance policies. The death proceeds go to the named beneficiary; occasionally, a beneficiary may not know a policy exists. Recently, 60 Minutes did an exposé on the insurance industry. Major insurers had withheld more than $7.5 billion in life insurance death proceeds from beneficiaries. They had a contractual reason for doing so: the beneficiaries had never stepped forward to file claims.⁵ While many of the policies involved were valued at $10,000 or less, others were worth over $1 million. The deceased policyholders had either failed to tell their heirs about the policies or misplaced the copies and the paperwork. Their heirs did not know (or know how) to claim the money. As a result, the insurance proceeds lay unclaimed for years, and the insurers only now feel pressure to pay out the benefits.⁵

Once you update your estate plan and beneficiaries, let your heirs know that Kaizen can help in case of the unexpected.

Your heirs should know that you have an estate plan, of which we have a copy; and that you have named power of attorneys, trustees, and guardians for minor children in your estate plan.

We help ensure that your beneficiary decisions on retirement, brokerage and bank accounts, college savings plans, and life insurance policies suit your wealth transfer objectives. We like to meet your beneficiaries and trustees before the estate plan becomes necessary so they know us and we can help them through a difficult time.