The Seven Deadly Sins of Beneficiary Designations - #1

Deadly Sin #1: Not Updating Your Beneficiary Forms

The beneficiary designation form takes precedence over the will, trust, or any other legal document. If you do not pay attention to detail and update your beneficiary forms after life events such as marriage, death of a loved one or even divorce, you may be in for a rude awakening.

To illustrate, a Brooklyn man was left without a dime even though his wife’s pension was valued at almost a million dollars. Bruce Friedman, 61 and his wife Anne were married for almost 20 years, when Anne passed suddenly from a heart attack. Bruce had no doubt her school pension would go to him, since on the teacher’s monthly pension statement it indicated no named beneficiary.

Because he was Anne’s closest beneficiary he knew he would receive those funds. But, the state found a form filled out 27 years prior indicating the named beneficiaries were Anne’s mother, uncle, and sister. Her mother and uncle were dead, so the funds went to her sister, Anne McLaughlin. Even though Bruce appealed the ruling, a Manhattan Supreme Court stated “that Anne’s intention of making her husband the beneficiary could not be assumed and that the paperwork on file was clear” (Haberman).

Bruce Friedman will not get a dime of his wife’s retirement. Make sure you update your beneficiary forms, or your money may not go to the proper person.
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