Posted By: CFP&WM On: Feb 27th, 2012 In: Money Matters

Dead Man With Outdated Beneficiary Documents Gave $1 Million to Ex-Wife

A widow recently came to the office and told a sad story that everyone should hear.

Her husband “John” went to school, got married, built a successful company, had 3 kids, got a messy divorce, remarried and died. The problem is that his Transamerica life insurance policy and his Keogh retirement plan at Merrill Lynch listed his 1st wife as the primary beneficiary, not his kids or current wife.

Guess who got these assets upon his passing? You’re right the ex-wife.

John would be turning in his grave if he were aware that his oversight sent over $1 million to the wrong person.

Sheryl Garrett, the founder of Garrett Planning Network (the largest national organization of hourly financial planners) recently said “I encourage people to reconsider and recheck their current beneficiary designations whenever there is a change in their family or personal circumstances. These changes include marriage, divorce, the death of a beneficiary, a change in charitable desires, a new child or a child reaching  the age of maturity. To be sure recheck beneficiary designations every 5 years if they think nothing has changed.”

Regardless of the size of your estate, whether you have been married or not, have kids, and regardless if your life insurance policy is with Metropolitan Life, New York Life or some other or you have a retirement plan with Morgan Stanley, Charles Schwab or Fidelity, it is essential that you review the beneficiaries listed on every account.

Review all life insurance policies and retirement accounts. Contact every company and get a written statement as to who is currently listed as the primary beneficiary as well as the contingent beneficiaries (those who would receive payout should you outlive the primary beneficiary). Be sure it reflects your current wishes. If it is not correct ask for a change on beneficiary form and make your wishes known. Store this list of beneficiaries with your other estate planning documents.

The time you take could be the best investment to ensure your wishes are carried out and not disappoint your heirs.

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