Tips for Managing Your Beneficiary Forms
By Melinda Gustafson Gervasi
April 12, 2021
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| Image by M. Gustafson Gervasi, 2021, Dandelions! |
Signs of Spring 2021 are popping up all around us. Before warmer weather pulls you outdoors and offers an abundance of activities, there is one Spring Cleaning Task I urge you to consider. Making sure your beneficiary forms are in order.
I few weeks back I contacted my Brokerage with a question about its management fees. The call was short, efficient, and eye opening. The call started with my questions about how management fees are calculated and ended with the representative telling me that one of my IRA's did not have a beneficiary form listed. "Seriously?" was my response. I knew with certainty that I had completed those beneficiary forms, taking great care to name my spouse as primary and our children's trust as the contingent. "No Ms. Gustafson Gervasi, I am sorry. We have no record of a beneficiary form" the representative chimed. Routinely I caution my clients about this problem with financial institutions, and here my own broker had made an error. Somehow or other the beneficiary form was not received or uploaded. Sadly, this happens far too often.
Here are a few thoughts on managing your beneficiary forms:
- List all of your assets that have (or should have) named beneficiaries;
- Typical assets with beneficiary forms include: IRAs; 401Ks; Roth IRAs; Annuities: Pensions: Brokerage accounts, life insurance; and Health Savings Accounts;
- Confirm each beneficiary form says what you think it says by contacting the financial institution;
- Gather hard copy proof of the beneficiary form (screen shot, letter from the company, etc). This gives your estate proof of the contract (A.K.A. a beneficiary form) if you die and the company states there is no form on file. Keep this proof with your estate planning documents.
3 comments:
To hear that a person such as yourself experienced a "No Ms. Gustafson Gervasi, I am sorry. We have no record of a beneficiary form" situation is eye opening. You state 'my own broker had made an error' and 'Sadly, this happens far too often.' I believe you! And such errors (see below) probably occur at a greater frequency among those of us who are less well organized than yourself.
Sorry, I have not researched this, but I am guessing that perhaps Brokerages, etc., are under no obligation to periodically contact their clients with information in this regard. And since there may be so many common modes of failure (never completed a form; completed but did not mail; mailed but never received; received but not properly entered or recorded; receipt and recording not confirmed with client; changes and superceding documents mishandled; and so forth) the need for diligence is great. Is there a frequency at which you suggest we document such things? Every five years? Every ten years? I'm not looking for advice here (this is a blog!), just hoping to spur the thoughts of other readers. Thank you.
Thanks for commenting! My initial thought is the issue is more about documentation of your intent among your estate planning documents as opposed to a periodic audit of the financial institutions you work with. Overall, it is wise to "glance" at your estate planning documents annually to confirm your paperwork is in order.
I wonder if the will could be structured as a backup plan if the financial institution should lose the POD/TOD.
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