As the nation grapples with the impact of the Coronavirus pandemic and its financial impact, it’s essential to be attentive to preparations that can make a huge difference, particularly in the event of an untimely death.
Here’s some thoughts from an advisor (who chose to remain anonymous) on the front lines of this aspect of the pandemic…
Three critical and hard lessons learned that you (and those you support) want to avoid:
1. Beneficiary Forms: Two individuals did not have a beneficiary form that could be found. That means that what should be an easy process has become a nightmare for the surviving family. I can’t stress enough how important a beneficiary form is—if filled out properly, funds can be transferred to those listed within days versus if no beneficiary listed or found, expect significant delays. Also, if that person has no will and their estate needs to be assembled by Probate Court, in this environment it will likely be a long time before assets can be distributed. Not to mention it probably won’t be done in the most tax-efficient manner!
2. List Contingent Beneficiaries: Many fill out a Beneficiary form but don’t designate Contingent Beneficiaries. That can be a huge mistake if both die because in that case, the assets get thrown into that person’s estate—limiting the tax benefits of passing onto others versus potentially paying income taxes.
3. Durable Power of Attorney: This is needed in case someone falls sick and becomes incapacitated to make decisions. This is especially true in situations like the current coronavirus where the infected individual’s health can deteriorate so rapidly, and family members are totally isolated from the victims.
This is an opportune time to have everyone revisit their beneficiaries—not just for themselves but for their clients, families, and friends—not only for retirement plans, but for IRAs, annuities, insurance policies, etc.
