If someone named you as a pay-on-death beneficiary of a life insurance policy, a retirement-type account (IRA, deferred compensation plan, 401k, etc.), or even just a brokerage or regular bank account, you will need to find out how to claim the asset.
The following are some general tips – not legal advice. Be sure to consult an attorney if you get stuck in the process or are unsure of your best options.
Getting Basic Information
Most financial companies will not provide any information until they have received a death certificate. Even then, they might not say who the beneficiaries are or whether an account even has any. You’ll simply have to ask for and submit the company’s claim paperwork and wait for a response. Keep copies of anything you submit, and keep track of your correspondence.
Financial companies provide phone numbers for information, but the account representatives who pick up the phone may not be able to answer your questions without referring the matter to their legal department. Expect delays.
Submitting the Claim
This process, and the paperwork involved, will depend on the type of account and on the company that manages it. Pay-on-death bank accounts and basic life insurance policies generally require simple, easy-to-understand forms. The paperwork for retirement-type accounts often includes a complicated set of options, depending on your relationship to the decedent. Choosing the right option for such accounts also requires a beneficiary to evaluate tax consequences, so it may be extremely important to get advice from a tax professional before submitting the claim forms.
What if an Account has No Designated Beneficiaries?
It is common for someone to have opened an account without naming beneficiaries. Years may go by, and this all-important task may be forgotten. Also, it is possible that an account holder outlives all of the beneficiaries he or she named years earlier. In these situations, the account may become an asset of the decedent’s estate, possibly requiring some kind of probate procedure.
In other cases, there may be a default list of beneficiaries in the event that no effective designation was made. The list is usually the same: (1) a surviving spouse; (2) if no spouse, surviving children; (3) if no spouse of children, surviving parents; and so on. In other words, you might find yourself to be a beneficiary even if you were never listed as one by the decedent.
Don’t Wait
As soon as possible, notify the financial company of your actual – or potential – interest in an account. If nothing else, this will put the company on alert about your potential claim. It is usually helpful if you provide information about other potential claimants as well, as the company will likely refuse to honor a claim until it is sure that all of the rightful claimants have been identified and have submitted the proper paperwork.
These companies frequently receive competing – and often fraudulent – claims. Sometimes, they prematurely or mistakenly pay such claims, only to have to pay again when the rightful beneficiary is identified. Don’t give up on a valid claim just because an account has been paid out to someone else!
Philip Batchelder
510-368-3698, philip@batchelderlaw.com