Tag Archives: beneficiary law

Are your loved ones protected when you die?

last-will  Larry and Susan had been living together for more than 20 years.  They never legally married; they said once had been enough.  A piece of paper wouldn’t change how they felt about each other.  Larry had been married before and had two sons.  Susan had also been married previously and she had a daughter.

When Larry’s father became incapacitated, they moved into his house to take care of him.  His father, to thank them for all they’d done, left the house to Larry in his will and named Larry beneficiary of his life insurance policy.  When his father died, Larry inherited the house and Susan and Larry continued to live in the house.  Larry promised to deposit the check from the insurance company into their joint bank account as soon as it arrived.

As Larry was crossing the street on his way home from work one day, he was struck by a car driven by a drunk driver and he died almost instantly.

Larry didn’t have a will and had not left any legal document naming Susan as his heir.  They lived in a state that did not recognize common law marriage so, when he died, his sons inherited everything.  They forced Susan to move out of the house and refused to give her any of the proceeds from the life insurance policy.  In essence, Susan was left with almost nothing!

Families today are very complex.  Some are the traditional married mother and father in their first marriage.  Many more are couples who were previously married to other spouses or who are legally married gay couples.  However, many people live together without benefit of a legal ceremony. This mixture of circumstances makes inheritance much more difficult and complex.

The only way to be sure your loved ones are protected is to prepare a will or a trust naming the person(s) you want to inherit your assets when you die.  Otherwise, state law will dictate who receives what.  Not you. It’s frightening that more than half of the people living in the United States today do not have a will and have not protected their loved ones. You can find a simple will form on the internet or can meet with an estate planning attorney to discuss the options that are best for you.

Don’t be like Larry.  Act now so those you love will be protected when you’re gone. For more information about wills and estate planning, go to www.diesmart.com.

Unclaimed property – Are you a beneficiary but you don’t know it?

Over the last five years or so, a study has been conducted to determine how insurance companies ensured that beneficiaries of life insurance policies were notified that a relative with a life insurance policy had died.

The study was initiated by California Comptroller John Chiang, who used a Connecticut auditing firm to examine the payment practices of 21 life insurance companies nationwide.  The Controller’s investigation “has revealed an industry-wide practice of companies both failing to pay death benefits to the beneficiaries of life insurance policies and ignoring their legal duty to turn the money over to the State for safe keeping.  Instead, companies would draw-down the policies’ cash reserves in order to continue collecting premium payments from the deceased.  Once the cash reserves were depleted, the company would cancel the policy.  Past audits also found that insurers did not routinely cross-check the owners of dormant accounts with government databases listing the deceased.  In other cases, companies had direct knowledge of the policy owner’s death, but still did not notify the beneficiaries.”

When questionable practices were uncovered, lawsuits ensued.  The premise of one of the latest was that insurers used the Social Security Death Master File to determine whether  those insured who had living benefit riders to annuities had died and, if so, they acted promptly to stop payments.  However, the Death Master File and other means weren’t used as often to ensure that beneficiaries of life insurance policies were promptly notified that a relative with a life insurance policy had died, and the funds from that policy paid out.

In the case of one recent lawsuit, the lead plaintiff claimed that he was notified only in 2010, four years after the death of the insured, and then only by the state of Illinois Treasurer’s Office…not by the insurance company.  He received only a small sum, and it wasn’t until June 2012 that a larger sum was paid, without a good explanation.

Earlier this month (June 2013), Mr. Chiang reached a settlement on behalf of the state of California and its residents with 11 insurance companies who had been found to have underpaid life insurance benefits.  The agreements he reached required the 11 companies to do the following:

  • Restore the full value of all impacted accounts dating back to 1995;
  • Fully comply with California’s unclaimed property laws and cooperate with the Controller’s efforts to reunite these death benefits, annuity contracts and retained asset accounts with their owners or, in many cases, the owners’ heirs;
  • Pay the policy beneficiaries 3% compounded interest on the value of the held amounts from 1995, or from the date of the owner’s death, whichever is later.

If the benefits are not paid to the heirs within a specified period of time, the law requires businesses to send the list of abandoned property to the state.  In California, the period of time is three years; it varies by state.  In many states, this has become a large source of revenue.  However, the states’ first goal is to return the money to its rightful owners.

Many other states have followed California’s lead, filed suits against the major insurance companies, and will also benefit from California’s settlement with those 11 companies.

To learn more about beneficiaries and estate related topics, go to www.diesmart.com.



Opt out – It’s one more way to prevent identity theft

You probably know that identity theft is a huge problem in the United States.  It occurs when someone uses your name or Social Security number to obtain identity documents and then uses them for financial gain.  But you may be surprised to learn that 25% of all identity thefts are of people who are deceased.

There are several ways to prevent identity theft and these are discussed in our book “Grave Robbers…How to Prevent Identity Theft of the Deceased.”  The second edition of this book will be out shortly.

One way you can deter thieves is by not getting unsolicited applications for credit cards or insurance.  If you’re like me, you get at least a few of these mailings every week.  And what happens to these applications?  If they come to your home,  you quickly retrieve them from your mailbox and then shred them, probably nothing.  But if they come to the home of someone who is deceased, they may sit in the mailbox for awhile, easy prey for an identity theft.

There’s one simple thing you can do.  Go to OptOutPrescreen.com and opt out.

What does this mean?  The consumer crediting reporting companies usually include your name on lists used by creditors or insurers to make offers.  When you opt out, your name can longer be included which frees you from unsolicited mail and protects your identity.  When you opt out on behalf of someone who is deceased, you are making it more difficult for an identity thief to steal their identity by applying for credit cards or insurance in their name.

It only takes a few seconds to do, costs nothing and will not only eliminate some of the unwanted mail you probably receive every day but will protect your identity as well.

For more information about identity theft as well as other end of life and after death issues, check out our website: diesmart.com.


Vermont passes doctor-assisted suicide law

Yesterday, the Vermont House of Representatives voted in favor of a bill that will legalize doctor-assisted suicide.  The State Senate had approved the measure previously.  All that remains is for Governor Peter Shumlin to sign the bill and the Patient Choices at the End of Life Act will become the law.

The bill is patterned after the Oregon model, which has several built-in safeguards.  These include a requirement that the patient state three times – once in writing – that they want to die.  Another safeguard is the requirement of a concurring opinion from a second doctor that a patient has less than six months to live and is of sound mind.

Critics of the bill feel that there is potential for abuse of senior citizens, while those in support of it believe that it makes a positive statement about the value of personal freedom.

If the governor signs the bill, Vermont will become only the fourth state in the US to permit doctors to help patients to die by writing a prescription for a lethal dose of medication.  The other three states – all in the west – where this is legal are Oregon, Washington state and Montana.

For information about end of life issues and planning, go to www.diesmart.com.

Whole Body Donation – Another Option


The other night, I was at the emergency room of our local hospital and overheard half of a phone conversation.  Evidently, a relative had died of cancer within the last hour and there was no money available for a funeral.  The person I could hear was lamenting that she had no idea what to do.  She wanted to do the “right” thing for the deceased but didn’t know what that was.

Respecting her privacy (even though she was talking on a cell in the middle of the lobby), I said nothing….but I began to think about options she might have.

One that is not talked about much but could have been the solution to her quandary is whole body donation. Study of human bodies can help in the discovery of cures for many diseases and medical conditions and can aid in the development of new medical and surgical procedures as well as new, potentially life-saving, medicines.

If you think this is something you’d like to do, you should make the arrangements prior to your death.  You can preregister with a medical school or research organization by signing a consent form stating your wish to donate your body.  A copy of the consent form should be put with your will and other valuable papers so it can easily be found.

When you die, your family should notify the facility.  They will transport your body transported to the research facility or medical school with which you signed the consent form.

If you did not sign a consent form agreeing to whole body donation, your family can still decide this is what they wish to do after your death.  They will need to contact the medical facility or research center of choice and sign an after death donor form.  Then the process is the same as if you had made arrangements pre death.

When the group to whom the body has been donated is finished with it, they will cremate it and return the ashes to the next of kin or dispose of them in the way you have designated.

Cost to the family – usually zero.

For a list of medical schools which accept whole body donations, check out the list published by the University of Florida State Anatomical Board.

A national organization we found which provides a lot of information about this subject is MedCure.

Finally, for further information about funeral options and body and organ donation, go to www.diesmart.com.