Periodic Review of Beneficiary Designations is Highly Recommended
It is happening with increasing frequency: proceeds of Individual Retirement Accounts and insurance policies discovered by families to be payable to clearly incorrect (or unintended) beneficiaries. We have seen many examples of this phenomenon in recent months. There was the IRA payable to the decedent’s estate rather than to his only child. The lack of a named beneficiary for an IRA usually triggers a default provision naming the estate as the beneficiary, and this causes adverse income tax consequences and exposes the proceeds to possible estate creditors. In other cases, insurance policy proceeds were payable to the trustees of a trust that had been revoked fifteen years before and payable to the trustees named in a Will superseded by a Will that established no trusts.