The Saturday Trust—Name Your Beneficiary

Pay attention!  This is super important...


5 Beneficiary Form Mistakes to Avoid
Re: Insurance Annuties & Individual Retirement Accounts

Read this great article by Bankrate.com on the importance of naming your beneficiary(ies).


"Otherwise capable and intelligent people don't always do proper estate planning because they don't want to address their own mortality."  
--Joel Larsen, Certified Financial Planner


Photo by Bankrate.com


I can tell you from personal experience that it is vitally important to update the beneficiaries on your insurance and retirement accounts every time that there is a major life event, i.e. death of a beneficiary, a remarriage or a divorce.  

After his wife passed away, my dad tried to remove her name as a beneficiary from his 5-year select annuity life insurance policy, but the insurance company made it exceedingly difficult to complete the process.  He mailed in the form, but they said that it never arrived. So, he faxed it to them and confirmed that it was received, but they simply failed to process the paperwork.  When he followed up, he was told that he had not sent in the correct form.  They basically gave him the run-around for five years until he died.  

His wife's name was never removed, and when he passed away, the insurance company refused to acknowledge my claim.  Even though she had predeceased him by 5 years, and he had managed to update the beneficiary by naming the trust, the insurance company refused to acknowledge the legal authority of the trust, and the issue was forced into probate court.  

The judge granted our Set Aside Order to administer the estate, basically acknowledging that my dad had a Last Will & Testament that superseded the trust and established me as the Executor.  The insurance company accepted my authority as Executor of Estate and paid the claim.  

If my dad had named me as the beneficiary, all of that could have been avoided.

"The IRA beneficiary form overrides your will."  -- Neil Brown, CFP; CPA


The Big 5 Mistakes

Pay attention to these 5 beneficiary mistakes...

  • Outdated Forms — Update whenever there is a life event, i.e. the death of a beneficiary, a remarriage or a divorce
  • Naming Your Estate — This forces the issue into probate court.
  • No Financial Controls — Naming a minor child as a sole beneficiary is a big mistake without financial controls.  Ask for "restrictive beneficiary endorsements" on IRA or annuity policies.
  • Forgetting to Name a Guardian — If you name an underage child (under 18), and forget to name a guardian to oversee the assets until the child reaches legal age, the court will appoint a guardian.  If you are divorced, the court may appoint your ex if your ex is the biological parent.  

Even the most bulletproof beneficiary form won't help your heirs if they can't track it down after you pass away.  -- Bankrate.com


  • Missing Paperwork — Keep copies of your beneficiary forms with your important papers in a fire-proof safe.  Do not assume that the bank or insurance company will be able to locate their own copies.

Protect your estate by reviewing your beneficiary paperwork with a certified financial planner or a trust attorney to make sure that these forms reflect your wishes and adhere to federal and state laws.  Community property states, for instance, require a notarized release from a spouse if you wish to name someone other than your spouse as a beneficiary.  

Do the right thing & take care of your beneficiaries!

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