Inheritance: Accounts and insurance
Financial accounts with named beneficiaries or transfer on death designations may bypass local legal processes—as may the proceeds from life insurance.
Some assets are relatively simple to transfer to beneficiaries.
Some types of financial accounts, retirement accounts, and insurance policies with named beneficiaries, may all be able to skip the local legal process. It is useful to know how to ensure that your estate goes directly to the beneficiary.
Trusts may be able to transfer assets outside of the local legal process. Typically, the trustee carries out the terms of the trust and distributes assets. If you are named as a beneficiary of a trust, the trust will usually spell out when and how you can access the trust assets.
Finding life insurance policies
Many people have life insurance coverage through their employer. That may be a good starting point when looking for a life insurance policy that you think may exist but haven’t been able to find.
There are some other resources you can use when looking for insurance policies.
- A financial or tax advisor may know if there are existing policies.
- Bank or credit card records may show payments being made to an insurance company. Or there may be correspondence in the mail from an insurance company.
- Income tax returns may show interest income from an insurance policy.
How to claim life insurance benefits
Life insurance policies don’t generally go through the local legal process, so beneficiaries can contact the insurance company directly. Depending on local regulations, the proceeds may not be subject to income or inheritance tax – your tax advisor can help here.
The first step may be notifying them of the death. The company should provide a form or an online link to filing a claim. A certified copy of the death certificate is typically required.
If there are multiple beneficiaries, each person would go through the claims process separately.
Annuities
Annuities are insurance contracts that make regular payments to the owner—either immediately or at some point in the future. Some annuities cannot be inherited, as payments stop when the owner passes away. Some, however, can pass to a designated beneficiary or have special provisions for transfer to a partner.
Because they allow the owner to name a beneficiary, annuities that can be inherited do not usually have to go through the local legal process and you can contact the company for ownership transfer instructions.
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