By LouAnn Schulfer,  AWMA^®, AIF^®
Accredited Wealth Management Advisor^®
Accredited Investment Fiduciary

When is the last time you reviewed your beneficiary designations?   For many people this easy task is one that ends up on the procrastination list.  Life changes and with it, should be a review of beneficiaries, trustee powers, powers of attorney, and transfers on death.

Beneficiaries are designated on life insurance policies and retirement accounts.  You may name one or more primary beneficiaries as well as one or more contingent beneficiaries in percentages that you choose.  Per stirpes instructions can be added, which essentially means that if one of your primary beneficiaries predeceases you, their share passes on to their children rather than being divided among the remaining primary beneficiaries, which would be a per capita instruction.  These terms are commonly used in wills and trusts as well.

In brief, trustee powers are those that you designate with a trust, meaning who you give the authority to at a defined time such as incapacitation or death, to control assets of the trust or estate.  Powers of attorney may be appointed for financial or healthcare needs.  Transfers on death are named on non-retirement accounts such as savings, checking or other investments.

I attended a conference in Austin, TX recently where the speaker told of a case where his company had received a letter from a policy holder stating that he was naming a new beneficiary for his life insurance.  Upon receiving the letter, the company immediately contacted the owner of the policy and overnighted the company forms which were specifically needed for the update.  In other words, a letter would not suffice:  to be a valid update, the company required their own forms and a notarization to make the change.  The story does not end well, as the insured passed away before sending back the required forms.  The company was bound to pay the death benefit to the named beneficiary on the company’s original forms signed by the policy owner.

Follow up with the company to confirm a change in beneficiary has been accepted and processed.  I have a client whose wife amended her beneficiary designations shortly before her passing.  On one form, she began to write something, crossed it out, and continued.  The company questioned whether this was valid.  Had it been deemed invalid, the account would have paid out per the prior beneficiary form instructions.

Life insurance policies and retirement accounts are often big-dollar items and are put in place to take care of big-dollar needs.  If you remember one thing from this article, remember the importance of properly updating your beneficiary designations and other instructions when life changes, so that upon your passing, the transfer of assets and settling of your estate is a smooth process.

LouAnn Schulfer is co-owner of Schulfer & Associates, LLC Financial Professionals and can be reached at (715) 343-9600 or [email protected].  www.SchulferAndAssociates.com

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor.  Member FINRA/SIPC.