By LouAnn Schulfer, AWMA®, AIF®
Accredited Wealth Management Advisor^SM
Accredited Investment Fiduciary®

I met with delightful couple recently as brand new clients.  They’ve worked hard and equally as important, practice sound financial disciplines.  They’ve saved and invested regularly, having worked with an investment & insurance representative for over 25 years

As part of our process, we reviewed life insurance policies; they’ve been paying premiums on a contract the husband put in place in 2002, prior to begin married.  We reviewed the death benefit, cash value, premium requirements, and the ownership of the policy.  The annual statement did not display the beneficiary, but he was sure it was his wife, which he remembered discussing with their representative years ago.  We called the company to double check:  to his and his wife’s surprise, he was told his parents are the beneficiaries.  Apparently, this had not in fact been updated.  He immediately requested beneficiary update forms.

We discussed how this could have played out.  Had he died without updating, the insurance company would be obligated to pay the death benefit to the beneficiaries they have on file:  his parents.  This supersedes any other documentation his wife could have provided:  wills, notes from client meetings that their previous representative could have had, or any other forms, documents or instructions.

We then went on to discuss what could have happened had the parents received the death benefit.  They could have kept the money, even though it was the couple who had paid all of the premiums:  legally, it is 100% theirs.  Or, his parents could have recognized the oversight and given the money to the wife/widow.  Doing so would be considered a “gift” from the parents to the wife/widow, and gifting issues including taxation would need to be dealt with.

Whether it’s life insurance or financial accounts, it’s always good to double check your beneficiaries.

LouAnn Schulfer is co-owner of Schulfer & Associates, LLC Wealth Management and can be reached at (715) 343-9600 or louann.schulfer@lpl.com.  www.SchulferAndAssociates.com

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor.  Member FINRA/SIPC.