Life Insurance: Beneficiaries Bypass Will & Probate - YouTube

Today's lesson is about beneficiary  forms, and it's kind of like ‘Oh yippee’  

we're going to talk about beneficiary  forms. To that I'm going to tell you this is  

might be the most important thing that we do,  among a number of important things but to to get  

people to keep these things updated  and be aware of them and make sure  

that the money in a particular account  is going to end up in the right hands.  

So this is both a problem and an opportunity, and  so the the problem is is we bring in new clients  

all the time and we really require that they  bring in everything every financial document that  

has a beneficiary on it or just every financial  document and what i'm talking about is every IRA  

401k, life insurance policy, annuities and every  financial account has a beneficiary designation  

on there and many times they haven't been  touched in 30 or 40 years.People haven't  

even thought about it and when i'll start asking  people questions about this when they're coming  

in as new clients they say “Oh we redid our will  that's all taken care of.” Okay and I said, “Great  

you know I'm glad that you redid your will but  that will is going to get settled through probate  

maybe a year after you die and the money from  your IRA after your death is going to go to  

whoever's on that named beneficiary form. This is  going to happen long before that will is settled.  

It doesn't matter what the will says this  money is going to the name beneficiary,  

and so i tell you another problem that  we run into is inconsistencies and when  

people start bringing this in they've got  different people on this different stuff  

depending upon when they bought it and within  their life and then maybe they changed one  

and they didn't change another. So the message  here is get out everything that you have that has  

money on it or financial or numbers get it out and  find out who's the beneficiary on that get a copy  

of it it's online. If you can get on your account  online or request it like in a retirement account,  

you may not be able to get it online, well then go  to the plan administrator and call them or write  

them and say “I want a copy of my beneficiary  form.” Don't ask them who's the beneficiary,  

just have them send you a copy, and then what  you're going to want to do is get all of these  

in the same place, and my guess is if you'll  go do this and you get them all together  

and you get them written down you're going  to find there might be some inconsistencies.  

The people that come into us, we do this for them  as part of the financial planning process and it's  

becomes a big part of the estate planning process  and this is where the opportunity comes in  

is is that when you think about estate  planning that means i'm going to  

plan what's going to happen with my stuff and  my money after i die. Who's going to get it  

and you know people get pretty specific about  this, I mean generally they wanted to go to  

their children, or to their surviving  spouse first and then to their children.  

Some people don't have children, some people  don't want to give it to their kids equally, some  

people don't want to distribute it all to their  kids, some folks want to give it to the church  

or another charity or they may have nieces and  nephews. I mean it's just it's all kinds of people  

you get to decide that what what my job is, and  really your job when it comes to beneficiary  

forms, is just to see where it all stands right  now and then if through the financial process  

planning process we implement something for you,  or we get a plan started and you get some new  

products or some new financial instruments, well  then we're going to make out those beneficiaries  

on those new accounts exactly according to what  you want. Then it's our job to keep them updated.  

I mean that that's the problem is is that people  don't really think about this or if they went  

to a lawyer, they did their will they're thinking  they took care of all that, and this is a separate  

thing. It didn't have anything to do with the  will, and the real opportunity with that is  

that you have these named beneficiaries all this  stuff is going to get settled 30 to 60 days after  

you die. I mean there are instances where a life  insurance company is going to take a little longer  

to pay off because they got to investigate a  claim or investigate the policy, but typically  

this is 30 to 60 days if your heirs get about  their business of getting the right forms into  

them. We just had an example with one of our  companies, where this lady's mother had passed  

away. She was the beneficiary. She called us up,  she actually had about four different companies,  

and the only one we sold her was with a big  mutual company. We called the phone number  

looking for a claim form. We got the lady on  the line, they filled out the claim form online.  

They could see that this lady was the beneficiary  of her mother's policy, they verified that her  

mother died through an obituary online  and paid the claim instantaneously,  

and then they took banking information from  her and zapped the money to her. I mean it's  

just that's fabulous you're not going to get  that kind of service out of the probate court  

down at the county courthouse, I can assure  you. So, this is an estate planning tool,  

the beneficiary designation, that we use  quite heavily, but that comes with a risk  

as well as an opportunity. They need to be  filled out properly, they need to be updated  

from now on so that you know when you die you  can't change this afterward. So it's got to be  

the correct way. Now we're going to talk about..  Well I wanted to mention this financial accounts.  

We don't find a lot of our incoming accounts, that  people have actually used transfer on death. So,  

you say my bank account doesn't have a beneficiary  form- well it has something that's called,  

a little something different, it's called Transfer  on Death, and it's just like a beneficiary,  

and typically most people coming into us don't  have these things so that would be another area  

that you could check with your bank or your stock  brokerage or any other type of account is. Do they  

have a transfer on death? And you, you maybe never  filled that out. It's an opportunity for you to  

just have that money pass outside of probate as  well. Now a contingent beneficiary, what's that?  

A contingent beneficiary has no standing after  death if the primary beneficiary is alive,  

so the only purpose of a contingent beneficiary  is if somebody, if the primary beneficiary is  

deceased. And I can't tell you the number of  policies that we bring in or people that we help,  

and the beneficiary, the name beneficiary  years ago on this policy, that is already dead,  

no contingent beneficiary. And what happens in  that case is now we have to reopen the estate  

of the deceased person, who is the beneficiary and  distribute the money through the probate court,  

essentially, and it costs a lot. There's delays,  it's a real big hassle to make all that stuff  

happen, so you're going to want to name contingent  beneficiaries. It's just who gets the money if  

the primary beneficiary is no longer here. If  you have several primary beneficiaries, then  

you know you need to call me, and we'll talk  about that just to get them done properly. Now  

multiple beneficiaries is each share written  clearly, I mean, you know they just, if they're  

to use percentages they all need to add up to  100. I mean there's only so many slices in a pie,  

unless you slice it real thin, but it all  the numbers and percentages need to add up  

to a hundred or you can use a third a third or  third it just needs to be clear and if it's not  

clear it's very easy to change beneficiaries.  At the same time you're calling these companies  

and asking them to see the beneficiary form, or to  see it ask them for a change of beneficiary form,  

and if you can get online, it's typically  just somewhere in there. You can download  

it. You bring all this stuff into me or you  send it in to me if you live 10 states away  

we fix this stuff for people even with insurance  companies and policies we didn't even write. Now,  

so where are your beneficiary forms? I mean we  typically, you know, we recommend that people put  

their estate plan and all their insurance policies  and some reference to the beneficiary form for  

the retirement account all in one place. Now in  the modern time, we provide an encrypted server  

that goes on for our clients that are  incoming, so that everything will just  

be there with passwords so that you, and  then we've got to inform the beneficiaries.  

So, in just preparing for this lesson some of my  compadres that I'm working with just really asked,  

“Well you know if you leave this niece you know  the beneficiary of a life insurance policy,  

should you tell her?” Well i think  that'd be a pretty good idea,  

and also if she's not your primary person too,  like if your daughter is the person taking care of  

all your matters it'd probably be a good idea to  tell your daughter, and then have it in that place  

that you know this policy. The name beneficiary  is Sarah, my niece, and then the contingent  

beneficiary in case Sarah's deceased, is my  nephew, or somebody, or back to my daughter.  

You know who knows, so just the importance of  taking this seriously, getting it updated, having  

it be consistent with your will. I mean it's fine  if you have all this written down in the will,  

this is going to take precedence,  but you still need a will.  

I mean you can't put a beneficiary designation on  a house or a boat or a beach house or something.  

You also could do a trust and that's another way  to avoid probate, so we can get into all kinds of  

sophisticated financial planning and we recommend  most clients redo their will, but most people  

are missing this whole point of how prevalent  beneficiaries are and then how easily they're  

settled after you know after a person passes away.  So I'm Hans Scheil, and I thank you for listening.