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Don't Leave Your Survivors in the Lurch

Don’t Leave Your Survivors in the Lurch
By Peggy Bednar
President of Palmetto, SC, Branch 631 and Postmaster of Rock Hill

It will happen, it is inevitable. Believe it or not, you won’t live forever. Planning for your loved ones after your death is not easy. By nature, it is something we don’t like to think about or discuss while we are able. But when someone dies that affects you, then you will understand this is a task you should not put off another day.

The beneficiary requirement on every private life insurance policy should be completed at the purchase of the policy. If you don’t tell the insurance company who you want to receive your insurance benefits, why have a policy at all? If no beneficiary is named, it causes great turmoil in the circle of people who have brought joy and happiness while you were alive.

What about other policies you have, such as employer-provided life insurance, and your Thrift Savings Plan account? These are policies you signed up for and never gave another thought.

However, if you don’t complete the beneficiary form, here is the order in which your hard-earned money will be distributed—taken directly from the TSP website, tsp.gov:

Order of Precedence. If there is no beneficiary designation on file, the participant’s entire TSP account will be distributed as follows:

1. To the participant’s spouse

2. If none, to the participant’s child or children equally, with the share due and deceased child divided equally among that child’s descendants.(1)

3. If none, to the participant’s parents equally or to the surviving parent. (2)

4. If none, to the appointed executor or administrator of the participant’s estate.

5. If none, to the participant’s next of kin who is entitled to the participant’s estate under the laws of the state in which he or she resided at the time of death

Note: A will, prenuptial agreement, separation agreement, property settlement agreement or court order will not override either a beneficiary designation or the order of precedence.

(1) As used here, “child” means either a biological child or a child adopted by the participant. It does not include a stepchild unless the participant has adopted the child. Nor does it include a biological child if that child has been adopted by someone other than the participant’s spouse.

(2) “Parents” does not include step-parents who have not adopted the participant.

I recently had a close friend’s family suffer a tragic loss. You guessed it—no beneficiary was listed on the life insurance policies. My friend’s partner had been divorced and never remarried. My friend and their partner lived together for many happy years. As a result of not having any beneficiaries named, no benefits were paid to the person who shared daily life experiences with the deceased.

Now, the surviving partner has to pay for the house they shared, the car they drove, as well as other financially shared property. This was the result of the decedent not completing a list of beneficiary designations for each policy.

Please, review your policies, as well as talk with your loved ones. Things change over time. Divorces happen, relatives die. When you have a life-changing event, review your beneficiaries and make changes, as needed.

This is a difficult conversation. But, once you have the talk, it will be easier for everyone when that day eventually comes.