Are Beneficiary Designations Correct ?

Are Beneficiary Designations Correct ?

The linked article below is an important reminder to all of us, financial professionals and clients- make sure your beneficiary designations and those of your clients are accepted and on file with their respective firms

 I do not know the story behind this ML case, but I certainly believe the expensive dispute could be avoided by:

  1. The client receiving clear communications that a beneficiary designation had been rejected and needed to be resubmitted while alive.
  2. A clear standard protocol for processing the paperwork when firm received. Important to train your personnel (protect the firm) by using a standardized  and effective document review process.  You need to prove not only to the owner of the account but their potential heirs why and when a document was rejected.  Critical to communicate that rejection. Too often rejected beneficiary documents are discovered with estate plans  and resubmitted for review after death through an expensive dispute or court process.   

One of the major errors that client's make  with estate plans is not confirming that Beneficiary Designations are complementary and coordinated with other estate docs  and their intentions. Although firms publish the beneficiary designations in the statements to help clients verify instructions,  they  assume clients read and understand the implications of these records. 

As a financial professional, when was the last time you did a beneficiary review with every one of your clients.  In my career, 80% of the time, clients need to make changes to their estate and beneficiary documents. Remind clients also of the importance to update any beneficary designations on file  with  employer for the retirement and death benefits. 

Great questions to ask yourself and your clients:

  • Do you know if your beneficiary designations are truly on file?
  • Does your family know?
  • Does your staff really understand how to review these submissions? 

A well organized, properly documented,  and communicated  estate plan  is a blessing to a family and its future generations. I believe as much wealth is wasted through family dispute and estate issues, than made in the market.  Critical that documents are  in good order and that family is prepared to inherit.