Do You Know Who Your Beneficiaries Are?

[PatrickA5]

All of our accounts have the surviving spouse as primary and the 3 kids as secondary (per stirpes). Once a year, I print out the beneficiaries online and put a paper copy in my When I'm Dead book. We also have a TOD deed on our house where it will automatically go to the kids after we're gone - but probably won't have the house by then. Right now, everything is set up to avoid probate.

 

[sengsational]

We also have a TOD deed on our house where it will automatically go to the kids after we're gone - but probably won't have the house by then. Right now, everything is set up to avoid probate.

In NC, the house passes immediately to the kids, outside of probate, so essentially a TOD deed, I guess. I got a 'how to be an executor' from Nolo. So many variations by state.

 

[Dash man]

We just do what our estate planning attorney tells us to do. For my IRA the beneficiary is DW and the contingent beneficiary is my rev trust. Why? I have no idea.

At Schwab, there is a "Beneficiaries" tab on the account "Service" page that tells all. You can change beneficiaries there, too. So if you're at Schwab you can easily answer @kaneohe's question.

Ours is set up the same way, going to the spouse with contingent being the trust. Our attorney was pretty adamant about this setup.

 

[kaneohe]

We just do what our estate planning attorney tells us to do. For my IRA the beneficiary is DW and the contingent beneficiary is my rev trust. Why? I have no idea.

.........................................................................

not sure what part the Why? pertains to ............but individuals (esp spouses)
are preferred as beneficiaries since they can stretch the IRA and keep it going.
Other individuals used to be able to do that but new changes have made the stretch shorter. The trust is like a catch-all for the assets remaining.

 

[OldShooter]

not sure what part the Why? pertains to ............but individuals (esp spouses) are preferred as beneficiaries since they can stretch the IRA and keep it going. Other individuals used to be able to do that but new changes have made the stretch shorter. The trust is like a catch-all for the assets remaining.

WADR, @kaneohe, please don't try to do your estate planning without professional help.

 

[harley]

yup, we know who they are. why? cuz there ain't many of them. 1 BIL, 1 sister, 1 nephew. as well as a few charities.

That doesn't necessarily mean you know who they are. Me beneficiaries have always been either DW or DD. But last time I checked on one of my TDAmeritrade accounts the beneficiary was someone I've never heard of. I contacted TDA and they said "oops".

I'm sure had I died it could have been resolved eventually, but it shows that it's not a bad idea to check occasionally, no matter how simple it might seem.

 

[rk911]

That doesn't necessarily mean you know who they are. Me beneficiaries have always been either DW or DD. But last time I checked on one of my TDAmeritrade accounts the beneficiary was someone I've never heard of. I contacted TDA and they said "oops".

I'm sure had I died it could have been resolved eventually, but it shows that it's not a bad idea to check occasionally, no matter how simple it might seem.

of course i know who they are. i should have been more precise. all of our pist-tax accounts and the house have been re-titled to our family trust. the primary beneficiary for the trust are my wife and myself. upon the second death and for all pre-tax accounts the beneficiaries are the same...my sister, my nephew and my BIL.

 

[VungTau]

Just a word on why listing the beneficiaries on your retirement accounts is SO important.

Recently I got my trust set up, and the lawyer explained to me the from the legal viewpoint, what is written in for the beneficiary on retirement accounts superceedes ANYTHING else. Trusts, wills, whatever...

So for example if you are divorced, get a new will or trust written but forget about changing the name on you 401k account from your ex to your new wife or trust, then on your death your ex WILL get your entire 401k account. From what he said there is NO way out of that unless the ex were to sign some sort of document... and let’s face it... most would never be that altruistic...

It was eye opening learning about that...

Very good information, thanks. Do you know if that is determined by each state? I will be getting married soon and need to think this through carefully.

 

[Oilcan]

The living trust, will, or any paperwork doesn't determine who inherits your IRA or annuity. It is the beneficiary designation on file for each account at each institution. You don't put it in the living trust because of the tax consequences.

Anyway that's my understanding after meeting with our trust attorney last week. He said many attorney's are not familiar with this aspect.

 

[SecondCor521]

Just a word on why listing the beneficiaries on your retirement accounts is SO important.

Recently I got my trust set up, and the lawyer explained to me the from the legal viewpoint, what is written in for the beneficiary on retirement accounts superceedes ANYTHING else. Trusts, wills, whatever...

So for example if you are divorced, get a new will or trust written but forget about changing the name on you 401k account from your ex to your new wife or trust, then on your death your ex WILL get your entire 401k account. From what he said there is NO way out of that unless the ex were to sign some sort of document... and let’s face it... most would never be that altruistic...

It was eye opening learning about that...

Very good information, thanks. Do you know if that is determined by each state? I will be getting married soon and need to think this through carefully.

It does vary by state. My state actually has a law that if you get divorced, then your ex would not get anything even if they were listed as a beneficiary; they are treated - for inheritance purposes - as though they had predeceased you.

I think there's a way to reaffirm if you actually do want it to go to your ex for some reason, but I never looked into that too much as that wasn't my preference.

In general, marriage and divorce laws are state specific, although there are obviously federal laws that also apply.

 

[zippy2020]

Yes, we had a similar situation to the OP's. Spouse's pension fund changed to a new software upgrade and.....surprise! Little things like beneficiary designations got dropped off.

In our case, we didn't discover it for some years, and then only because I had a new employer with a 401k I joined. Naturally I listed him as beneficiary.

Spouse decided on impulse to check his pension fund records, which we KNEW we had changed way back (15 yrs previous) when we got married. Imagine our shock when we discovered the beneficiary designation was blank in their records!

We corrected that one right away, LOL.

 

[Rosedala]

Put the bank accounts under a trust. Specify the beneficiaries in the trust. Only way to be certain, it would seem.

Hi statsman, I don't think one can put IRAs and other special accounts into the Living Revocable Trust.

As to to beneficiaries mentioned on statements I never had that and hope I won't have it either.....

 

[Rosedala]

I have a bank, and they do not show the beneficiaries on the statement, nor in my Account.
I have to phone, and then they tell me.
For all I know, after I get off the phone, the rep changes it to his brother

Sunset, for IRAs and other special accounts, don't you have to have a POD? For some strange reason you can't put them in a Living Trust. Until I decide whom to give the POD, I'm designating my Living Trust as beneficiary. Am I correct?

 

[Rosedala]

I’m nowhere near an expert but I do recall reading a book by Ed Slott that strongly advised against naming a trust as a beneficiary on an IRA. As I recall, the reason was that the stretch option would be lost. However, with the recent changes from the SECURE act that advice may not be as relevant (I think? Corrections welcome).

So....the only other way would be a POD right?

 

[Rosedala]

not sure what part the Why? pertains to ............but individuals (esp spouses)
are preferred as beneficiaries since they can stretch the IRA and keep it going.
Other individuals used to be able to do that but new changes have made the stretch shorter. The trust is like a catch-all for the assets remaining.

kaneohe, I thought it was the Will like a catch-all for the assets remaining. No?

 

[kaneohe]

kaneohe, I thought it was the Will like a catch-all for the assets remaining. No?

I think you might be right. google says a pour-over will works to put assets not already in the trust into the trust.....to remedy the oversight of the owner. So perhaps the pour-over will is the catcher and the trust is the final recipient before distribution. The will generally has to be probated so it would be nice to get things in the trust beforehand.

Our attorney advised individuals for IRA/401K beneficiaries with the trust as the final contingent beneficiary. Also the trust as the primary beneficiary for life insurance.

 

[Rosedala]

I think you might be right. google says a pour-over will works to put assets not already in the trust into the trust.....to remedy the oversight of the owner. So perhaps the pour-over will is the catcher and the trust is the final recipient before distribution. The will generally has to be probated so it would be nice to get things in the trust beforehand.

Our attorney advised individuals for IRA/401K beneficiaries with the trust as the final contingent beneficiary. Also the trust as the primary beneficiary for life insurance.

Thanks for confirming this to me. I'm never really sure about these things and they are SO important because a mistake cannot be corrected after the fact.

 

[Oilcan]

Thanks for confirming this to me. I'm never really sure about these things and they are SO important because a mistake cannot be corrected after the fact.

I'm not an expert on this and for sure not giving legal advise but: I have a revocable living trust and as far as life insurance, in most cases as I understand it, if you have a term life insurance policy most people put down their living trust as beneficiary. On the other hand a permanent life insurance policy has cash value and therefore cause heirs to have to pay estate or inheritance tax. So it should probably set up an irrevocable trust that would be the owner and beneficiary of the trust so the money would be paid to the trust and not to the estate. Course now we're talking about policies worth millions which most don't have, but the point is that I think it calls for advise from an attorney that specializes in these things rather taking a chance of getting it right from the start.

 

[TKDenver]

What's in a Name?

............for IRAs and Company Retirement Plans.............Note that is a different question than Do You Think You Know Who Your Beneficiaries Are?
The difference is that the former (Know) is the official list kept by banks or companies and the latter is your list.

Yesterday I got 6 e-mails from Fidelity telling me that I didn't have a beneficiary for my 401K plan. It was confusing because they also had a life insurance plan and another retirement plan and each e-mail seemed to differ as to whether I had beneficiaries for those other plans. Later (some hours later) another e-mail came saying to forget it........they had sent out those other e-mails by mistake.

In the meantime I had been probing the situation w/ Fidelity and after checking w/ rep#1 who thought he knew everything but actually knew nothing, I called back and got transferred to another rep who seemed more knowledgeable. She told me that my 401K didn't have beneficiaries but my DW's did. Although my plan had beneficiaries (confirmed) some yrs back , our group got transferred to a spinoff and although the 401K plan $$ got transferred, the beneficiary list didn't. DW stayed at the same employer and didn't have that issue.

There are other company plans that changed custodians so confirmation is needed. IRAs are in the same boat. Some were confirmed (in the past) with written acknowledgement. Some are questionable.....one bank lists the Roth IRA beneficiaries correctly w/ primary on one line, contingent on another line with appropriate labeling. The same bank lists TIRA beneficiaries separated but on the same line so it is not clear whether they consider them both primary or primary/contingent. Others I kept copies of the form I filled in but never asked for written confirmation.

Before this whole episode I was pretty confident that things were in order.
Now I'm not so sure..........I have come to appreciate VG as a custodian.
At least for company plans they seem to put the benefiaries clearly on every
quarterly statement. I need to get the rest of the world to follow in their
tracks.

So ... I just got married and have on my list to change my beneficiary on about 10-12 accounts. My DW is changing her last name to mine which is why I didn't make any of these changes prior to the wedding. The first changes one makes to a name are SSA/DMV. DMV will not make the change until SSA is complete. All SSA offices are closed and the only way they offer to make a name change is to mail in your driver's license - for about one month of processing. My DW does not want to drive w/o a DL for a month. My guy says that if I change the beneficiaries to her new name and I kick the bucket, there could be issues. So do I go ahead and make the changes now to her previous name and then change them all again once SSA opens up?? Hassle!

 

[OldShooter]

... So do I go ahead and make the changes now to her previous name and then change them all again once SSA opens up?? ...

If the current beneficiaries are not the people you want to get the money, then the answer to this question is a no-brainer "yes." For a little effort and little or no cost you increase the likelihood that your intentions will be honored.

Alternatively, make sure you don't die until she has finished with the name change hassle. This is a little like computer backup; you only need one backup. Made the night before the fire.

 

[The Cosmic Avenger]

So ... I just got married and have on my list to change my beneficiary on about 10-12 accounts. My DW is changing her last name to mine which is why I didn't make any of these changes prior to the wedding. The first changes one makes to a name are SSA/DMV. DMV will not make the change until SSA is complete. All SSA offices are closed and the only way they offer to make a name change is to mail in your driver's license - for about one month of processing. My DW does not want to drive w/o a DL for a month. My guy says that if I change the beneficiaries to her new name and I kick the bucket, there could be issues. So do I go ahead and make the changes now to her previous name and then change them all again once SSA opens up?? Hassle!

Considering the unknown delay in the name change, why not change the beneficiary now to her current legal name, then update it when she is able to change her name with no hassle? Updating beneficiaries should be pretty easy, I can do mine online in a minute or two. Do some or all of yours need to be done via mail?

 

[CRLLS]

Unfortunately, a trust does not guarantee anything. A TOD does. A trust is only as good as the trustee. If the Trustee does not follow the trust, then all intentions can be lost.

A Trust and Will can instruct a more complicated beneficiary tree. For someone who does not want to follow per stirpes, TOD and POD their simple listing of contingent beneficiaries can be too simple a device to handle the if-then desires of the owner.

 

[OldShooter]

H.L. Mencken advised us: “For every complex problem, there is a solution that is simple, neat and wrong.”

This trust stuff is complex, a fact not reflected in most of the posts here. For example, a TOD to a minor, a special needs person, or someone who is deceased can open a huge can of worms. A "complicated beneficiary tree" could probably be handled by a carefully written will. And, of course, a trust is only as good as the trustee. Which is a good reason to use a professional and, where possible, a trust protector.

With respect to all the enthusiastic DIY-ers here, this is not an area where SGOTI plus internet folklore is a good planning strategy. DW spent a large part of her career in a megabank trust department and has horror stories about badly drafted documents both from incompetent attorneys and from DIY estate planners. It was not uncommon for her or one of her troops to end up going to court to have problems rectified. The cost of that, of course, is borne by the trust, the estate, or both.

 

[Oilcan]

H.L. Mencken advised us: “For every complex problem, there is a solution that is simple, neat and wrong.”

This trust stuff is complex, a fact not reflected in most of the posts here. For example, a TOD to a minor, a special needs person, or someone who is deceased can open a huge can of worms. A "complicated beneficiary tree" could probably be handled by a carefully written will. And, of course, a trust is only as good as the trustee. Which is a good reason to use a professional and, where possible, a trust protector.

With respect to all the enthusiastic DIY-ers here, this is not an area where SGOTI plus internet folklore is a good planning strategy. DW spent a large part of her career in a megabank trust department and has horror stories about badly drafted documents both from incompetent attorneys and from DIY estate planners. It was not uncommon for her or one of her troops to end up going to court to have problems rectified. The cost of that, of course, is borne by the trust, the estate, or both.

Best advice on this thread I've seen yet! Thanks.

 

[TKDenver]

Some are online. I do not mind those. But others I need to contact the administrator, have a form sent to me, fill out and return. Really?!