June 5, 2014

Who is your Beneficiary?

By Richard J. Schillig, CLU, ChFC, LUTCF
Independent Insurance and Financial Advisor

Having our affairs in order include the proper beneficiary arrangement for our various plans.

A question for all readers – When was last time you reviewed the person or persons designated as beneficiary on your life insurance and retirement accounts including annuities? Can you recall the last time you reviewed that designation? It is generally a good idea to review your beneficiary designations annually. In my practice, I always ask clients and potential clients who is the beneficiary on your retirement plans and/or life insurance policies. The typical response received is the primary beneficiary is the spouse. That’s appropriate and normally who the beneficiary should be. But beyond the spousal primary beneficiary, often times I receive a “deer in the headlights” response.

Earlier we cited a recent court ruling awarding a retirement account of a deceased person to the former spouse – not the current spouse but a former spouse. That is a real life case in which current spouse was denied inheritance, because the beneficiary designation on the account was never changed from former spouse to the current spouse. This case demonstrates the importance of reviewing the named beneficiary on retirement accounts to include not just primary beneficiary but contingent beneficiary(s). Contingent beneficiary(s) could be as important as primary beneficiary designations.

It is generally a good idea to review beneficiary designations periodically and to inform your financial professional when there are changes in your life that could affect your beneficiary choices – such as birth of child, illness or death of family member, marriage, divorce and especially remarriage. It is important not only to inform your financial professional of this status but also to make sure the company – the insurance company or Investment company, mutual fund company, broker, banker to make sure your affairs are in order.

Recall that we periodically refer to the ‘greatest gift.’ Normally during the Christmas Season and the Season for giving, we refer to the appropriate gift for family and loved ones. The greatest gift we can provide for our families is the gift of having our affairs in order. Having our affairs in order include the proper beneficiary arrangement for our various plans. Can you imagine the inevitable conflict arising in that family in which a former spouse is the current beneficiary?

In today’s world with the prevalence of divorces and multiple families mixes, beneficiary designation updates are more important than ever before. We have numerous clients today remarried later in life following earlier divorce. Current husband has children from first marriage. Current wife has children from first marriage. Now as a new family what will happen to the assets of this new marriage for these spouses and children, step children? Do you see the potential for family disagreements in these situations? Would not an easier solution result from clearly define d and dated current beneficiary choices.

Most companies do not charge a fee for beneficiary designations. Most companies require merely the completion of a company designated beneficiary form. It is not a difficult process to achieve. Encourage all readers today when you finish readying this article…..ask yourself…..who is the primary and contingent beneficiary(s)to my assets? What evidence of that beneficiary designation exists? Encourage you to check on that today. Provide the greatest gift to your family….the gift of having our affairs in order.
This month our firm continues our no cost Retirement Analyzer service. In our analysis one of our first questions remains. Who is the primary and who is the contingent beneficiary(s) on your accounts? Our second question is what evidence of that designation exists? Let’s check! Let’s continue to provide for our families the greatest gift – having our affairs in order.

We continue our Community Meeting on Medicare choices. Next meeting scheduled for June 19 – 10 AM at our office conference room in Bettendorf. If you are aging into Medicare within next several months or within next year. Now is the time to learn of the basics of Medicare and the choices you have with Medicare. We welcome your calls and questions.

Filed Under: Family, Finance