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Beneficiary Designations – Low hanging fruit in the financial planning “treasure hunt.”

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Jan 02 2022

Beneficiary Designations – Low hanging fruit in the financial planning “treasure hunt.”

Errors in beneficiary designations are among the most common and potentially costly planning mistakes I catch. As part of the information gathering process, I routinely ask clients to provide copies of ALL beneficiary forms. These include transfer-on-death and payable-on-death agreements, life insurance and annuity beneficiary designations, IRA and Roth IRA forms, employer-sponsored retirement and health savings account designations, group life and AD&D coverage designations. Here are some of the common types of mistakes and oversights I have discovered –

  • Husband and wife had updated their beneficiary designations following the births of their first three children but forgot to do so after the fourth was born.
    A client who had been divorced and remarried failed to remove his ex-wife as the beneficiary on his life insurance policy.
  • A client was unaware that the beneficiary form he returned to his employer only covered is 401(k) plan and did not realize that a separate form was required for his group life insurance coverage.
  • An insurance company had noted the name of a different, completely unrelated client listed as the beneficiary of the client’s life annuity contract.
  • A client left one of his children as the sole beneficiary on a large IRA with instructions to divide it amongst his siblings.
  • A credit union lost the beneficiary form for an IRA.
  • A client accidentally listed one child as the primary beneficiary and the other as contingent when he had intended both inherit equally.

Bringing these mistakes to your clients’ attention is a wonderful way to demonstrate your value and strengthen the planner-client bond. As a best practice, we encourage all of our financial planner clients to keep copies of all of their clients’ beneficiary designations.

Contact Info: Laurey@fphawaii.com

The information contained herein is general in nature and should not be construed as providing specific tax or legal advice. All readers should consult with their tax and/or legal advisors for such guidance in advance of making investment or financial planning decisions with tax or legal implications.

Written by Laurey Shintani, FPQP® · Categorized: Estate Planning

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Recent Posts

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  • IRAs and Qualified Retirement Plans
  • Social Security
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Laurey@fphawaii.com

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Copyright © 2023 · Paraplanning Hawaii
Financial planners and investment advisers who hire Laurey should be aware that they bear 100% of the responsibility for vetting and implementing the findings and suggestions made as a result of the paraplanning services provided. Although some of the information gathered and findings/suggestions made may raise awareness of potential tax or legal issues or opportunities, nothing in the services provided constitutes specific tax or legal guidance, and the hiring financial planner/investment adviser is advised to consult with the appropriate tax or legal professionals before making specific recommendations to his/her/their clients.

Paraplanning Hawaii is a business division of Financial Planning Hawaii, a state of Hawaii Registered Investment Adviser (CRD#153930). Financial Planning Hawaii also provides separate fee-only planning services to consumers across the United States. Laurey Shintani is an employee of Financial Planning Hawaii. She and Financial Planning Hawaii Owner/Co-founder John H. Robinson also maintain separate broker-dealer and investment advisory relationships with J.W. Cole Financial, a FINRA member broker-dealer, and J.W. Cole Advisors, an SEC-Registered Investment Adviser. Financial Planning Hawaii and J.W.Cole Financial/Advisors are unaffiliated entities. Services provided under the paraplanning agreement with Laurey are entirely separate from the direct-to-consumer planning and wealth management guidance provided under Financial Planning Hawaii's fee-only planning business model and the unaffiliated registered representative and investment advisor representative relationships she maintains with J.W. Cole.