Mark Senick Attorney at Law

Life Insurance and Retirement Plan Beneficiaries

Your will or living trust does not control who your life insurance or retirement fund goes to upon your death.

It is not uncommon for me to find that clients have not filled out the beneficiary designations of their life insurance or retirement plans, such as IRAs and 401ks. Or, they may have filled out the forms years ago and either do not remember who was designated, or designated beneficiaries they are no longer close to or who are deceased.

If there is no beneficiary, or if the beneficiary has died and there is no backup named, the funds may go to next of kin. The beneficiaries in your will or living trust will not get a dime. If you are lucky, they may go to your estate to be distributed in accordance with your will or under the laws of intestacy (distribution when there is no will). Whether the funds go to next of kin or an estate depends on the life insurance policy or retirement plan agreement. In either case, the funds may well go to people who were not intended to get them.

Additionally, there are adverse tax consequences in having your retirement funds paid to your estate rather than directly to individuals as beneficiaries.

It is important to review your beneficiary forms periodically and to know who you have named. Simply signing a will does not provide that your retirement funds or insurance proceeds will be distributed as you state in the will.