Get What's Yours -- life insurance companies hanging on to your benefits (WSJ)

Why Decades-Old Life-Insurance Benefits May Still Go Unpaid

Smaller insurers balk at searching databases to check if policyholders have died; ‘It wasn’t priced in’

Kyle Haskins recently learned of a $74,000 payout from an insurance policy he didn’t know his grandmother had. Smaller firms are balking at the database searches that can turn up cases like his. PHOTO: AARON M CONWAY FOR THE WALL STREET JOURNAL

By 

LESLIE SCISM

Updated Feb. 26, 2016 9:41 p.m. ET

Some life insurers are fighting back against state officials who insist it is the companies’ job to check for dead customers.

The battle, led by small and midsize insurers, is reviving a touchy debate: When a policyholder dies, is it up to the insurance company or the beneficiary to make sure the benefit gets paid?

Historically, the burden has been on beneficiaries to file a claim after a death. Although that is still the typical way death benefits get paid, state authorities in the late 2000s began to compel insurers to turn over policyholder rosters so they could be checked against death databases.

Most large insurers agreed to the audits even though they believed the law didn’t require such extensive efforts. They decided that it wasn’t worth the reputational risk to fight the matter, and that new computer software made the change a logical one. Many were, in fact, already using similar checks to identify dead annuity owners in order to discontinue these customers’ payments.

So far the U.S.’s 22 biggest life insurers by premiums—including MetLife Inc., Prudential Financial Inc., New York Life Insurance Co.—have paid out more than $7.4 billion on old policies, either directly to beneficiaries, or to state unclaimed-property departments. The 22 insurers have agreed to regularly check a death database and conduct thorough searches to track down beneficiaries, according to officials in Florida, one of the lead states on the issue.

Now, authorities are encountering resistance as they try to get lesser-known outfits to do the same.

These insurers maintain that the long-standing system of expecting beneficiaries to file claims works well for nearly all deaths. They are also driven by economics—many of these insurers historically have sold small policies, not the million-dollar ones common at some large insurers, so they have less premium money flowing in to cover the costs that they say accompany the audits.

PREVIOUSLY

• Life Insurers Skimp on Payouts: States (April 28, 2011)
• Insurers Pressed on Lost Policies (Aug. 13, 2012)
• Are You Owed an Insurance Payout? How to Check (Feb. 22, 2013)

Kemper Corp., a Chicago-based insurer with a market capitalization of $1.4 billion, has been involved in legal fights in at least a half-dozen  states and hired lobbyists to make its case in some others.

“For more than a century, Kemper has paid all valid life-insurance claims in accordance with our policy terms and all state regulations,” the company said in a statement. “We believe it is illegal and improper for officials” to effectively demand retroactive changes to contractual terms. Kemper says about half of the roughly 20 states so far with new laws on insurers’ use of database searches limit the requirements largely to new policies. The other states apply the rules to existing policies.

The smaller companies’ opposition is emerging at a time when life insurers’ profits are being squeezed by low interest rates and increased competition.

The economics of searches are different between large and small insurers, particularly those such as Kemper that historically have focused on households of modest incomes. The average policy on Kemper’s books, for instance, has a death benefit of about $5,200, for which the consumer pays about $216 annually in premium.

Kemper, like some other smaller insurers, didn’t start asking customers for Social Security numbers until the 1980s, and for many years didn’t require exact birth dates, instead merely noting the buyer’s age at the time of sale. That makes it difficult to get reliable results in a database search, meaning insurers have to sift through paper records to fill in the gaps of identifying information. The costs, they say, quickly eat into profit generated by the small premiums, although state officials maintain those costs aren’t substantial.

“It wasn’t priced into the policies,” said Kimberly Moore, a vice president with N.C. Mutual Life Insurance Co., in Durham, N.C. She said the company still has policies on its books from decades ago with payouts in the hundreds of dollars.

Last year, N.C. Mutual successfully lobbied against a provision in a new state law that would have required life insurers to run all policyholders’ names through a death database. Kemper lobbied as well.

Ms. Moore said N.C. Mutual searches extensively for a policyholder and beneficiaries when the insured reaches a policy’s “maturity” age, typically age 100. “We feel we do a good job of finding people,” she said.

Many state officials see the issue as one of the most important they have tackled for consumers.

“I’ve talked to lots of people and I haven’t had more passionate and angry conversations than when they hear that insurance companies aren’t paying out benefits,“ said Illinois Treasurer Michael Frerichs. Kemper sued the Illinois State Treasurer in October to limit the scope of the state’s audit.

“At the end of the day, no one sits down and signs a life-insurance policy saying it may or may not be paid,” Mr. Frerichs said. “They don’t read the fine print.”

Florida’s chief financial officer, Jeff Atwater, called concerns about costs “a hollow argument,” saying none of the life insurers are small enough to qualify as “moms and pops.” Also, he contends, insurers are reluctant to allow audits because holding on to overdue benefits enables them to keep and invest the money longer.

Industry officials don’t dispute that overdue benefits have built up over time. But trade group American Council of Life Insurers says the problematic policies are a tiny percentage of the $1 trillion that was paid the conventional way over the past 20 years.

A growing number of consumers are applauding states’ efforts.

Kyle Haskins, a junior at Xavier University in Cincinnati, recently learned from Florida’s unclaimed-property department that MetLife had turned over about $74,000 in proceeds from a policy that his grandmother, who died about 15 years ago, had bought when she was a special-education teacher in Ohio.

“It is kind of shocking they have billions of dollars that haven’t been paid out in life-insurance policies,” he said of the industry. “I’m not upset or mad: I understand that’s how business works.”

MetLife said it couldn’t comment on any specific case for privacy reasons, but that it is “thrilled that Mr. Haskins has received the life-insurance proceeds he was due.”

Don't make these retirement account mistakes (Forbes)

Retirement Account Mistakes--Not For Dummies
Janet Novack

a guide to some of the traps created by the insanely complicated rules surrounding IRAs, 401(k)s and other retirement accounts


No, this is not another story lecturing you to save more, diversify, control your investment costs, or ignore the hot stock tip from your brother in law who did time for securities fraud. You’re no dummy.

What this is, instead, is a guide to some of the traps created by the insanely complicated rules surrounding IRAs, 401(k)s and other retirement accounts —traps that can snare not only smart investors, but also financial advisors, lawyers, accountants, and yes, even the Internal Revenue Service itself.

Lest you think that’s hyperbole, consider this: a U.S. Tax Court judge  ruled last year that a tax lawyer couldn’t use an IRS publication in his defense, because the IRS itself  had misinterpreted a provision of the law relating to IRA rollovers. “Even the IRS is confused,’’ marvels CPA Ed Slott, who makes a nice living training other financial pros about IRA rules and fixing the mistakes they and their clients make.

The sad fact is a normal human being not in Slott’s business can’t know all the rules. But taking a few minutes to acquaint yourself with the more common mistakes can help keep you safe and out of the IRS’ penalty zone. At the least, you’ll have a sense of when you need to consult IRS publications (which, despite that court ruling, you can usually rely on) or speak to a retirement account specialist at the financial institution where your IRA or 401(k) is held, or maybe even pay an expert for help.  Two key IRS Publications are  590a on IRA contributions and 590b on IRA distributions.  (There used to be just one publication 590, but it was so long, what with all the rules, that the IRS split it into two.) Note that part of what makes this all so complicated is that there are more than a dozen different types of retirement accounts, each with its own sometimes differing rules. So to be fair, Congress, not the IRS, deserves most of the blame for this mess.

To assemble my list of  25 Retirement Account Mistakes Smart People Make, I  consulted Slott and Robert Keebler, another CPA/IRA expert, and reviewed court cases, private letter rulings and government reports. Most of the mistakes  relate to early withdrawals, inherited IRAs, required minimum distributions and account rollovers. But  you can also get yourself in trouble putting the wrong thing in an IRA. (Tempted to hold gold in your IRA? The gold must be of a certain type and must  be kept with your IRA custodian, not under your bed.) Of course, this list of 25 mistakes is by no means exhaustive. Here’s a bonus tip that’s not on it: never ever, ever put a master limited partnership in a retirement account.

The discussion below offers some extra background on two areas where mistakes are particularly common.

Early withdrawals woes

Withdrawals taken from a traditional IRA or 401(k) before age 59 ½ are generally subject to not only ordinary income taxes, but also a 10% penalty  on the taxable amount. Fortunately, there are 11 separate exceptions, detailed here, that can get you out of the 10% extra hit. On their 2013 tax returns, 1.7 million taxpayers reported that they took early distributions, but only 1.2 million indicated they were subject to the additional 10% tax penalty, the IRS estimates.

The problem is that some of those 500,000 folks who reported themselves exempt from the penalty will get audited by the IRS and then hit with the 10% early withdrawal penalty and possibly an additional penalty for negligence.  That’s because they got the exceptions wrong. One common mistake: thinking you can take an early penalty free withdrawal from a 401(k) to pay college or graduate school bills, or to buy a first home, when in fact these penalty exceptions only apply to IRA withdrawals.

In one classic case, an accountant who had left Deloitte to earn his PhD  got hit with the 10% penalty for using $30,000 from his 401(k) to finance his graduate studies and buy a first home. The tax court rejected his argument that since he could have transferred the 401(k) money to an IRA first, and then used it penalty free for those very purposes, he shouldn’t have to take the extra 10% hit. The judge said he sympathized with the accountant’s confusion, and agreed that the law is “highly technical,’’ but concluded that, well,  the law is the law.

Another common misconception Slott flags: that you can get out of the 10% penalty because you took the money out to deal with a general financial hardship. The widespread confusion may stem from the fact that some employers allow early “hardship” withdrawals from 401(k)s. But that doesn’t get the employee out of paying either tax or the 10% early withdrawal penalty.

If you have a financial hardship, there may be other ways to tap retirement early penalty free. For example, if you’re 55 or older and lose (or leave) your job, you can tap money from your 401(k) penalty free– so long as you don’t roll it into an IRA first. (Yet another trap.)


Death traps

With a growing share of families’ assets in retirement accounts, mistakes made while passing them on are a big deal.  One easy to understand and fix mistake:  failing to keep your beneficiary forms up to date. The form on file with your IRA custodian, not any other estate document, and not an unfiled form you’ve stuck in your desk drawer, determines who gets your IRA.  If you want to make sure your ex-spouse (or an ungrateful child) doesn’t get your IRA, take him or her off that form as well as out your will.

Another batch of inheritance mistakes has to do with “stretch” IRAs. You can roll over an inherited IRA into your own name only if you inherit it from a spouse. (Although you should usually wait until you’re  older than 59 ½ to roll over your late spouse’s IRA  because withdrawals from an inherited IRA can be taken at any age without paying the 10% early withdrawal penalty. Once you roll an account over into your own name, you lose that early withdrawal flexibility.) But any individual beneficiary can retitle an IRA as an “inherited IRA” and stretch out withdrawals over his or her own life expectancy, thus gaining decades of tax deferred, or (in the case of a Roth IRA tax free) growth.

Although some in Washington, including the Obama Administration, would like to eliminate the stretch IRA,  this valuable tax break is available for now. Available, that is, so long as you (the IRA owner) or your heirs don’t make any mistakes.  One huge no-no is rolling an IRA inherited from someone other than a spouse into your own name. If you do that, the whole amount is immediately taxable. Instead, as a nonspousal heir, you must  retitle the IRA, including the original owner’s name and that it is inherited, e.g., “John X. Smith II,  deceased, inherited IRA for the benefit of John X Smith III.”  Similarly, if a trust is named as an IRA beneficiary, you can’t actually transfer the IRA into the trust. Instead, you retitle the IRA and deposit the yearly payouts in the trust. (Note that if you want to change the financial service company holding an inherited IRA,  you must do it in a trustee to trustee transfer.)

What about the mistakes IRA owners make that limit their heirs’ ability to stretch out the account’s life? A common one is naming your estate as your beneficiary on an IRA form. In many cases, that will force the IRA to be distributed within five years, cutting short the potential tax deferral or tax free growth. (The exact rule is this: funds in a Roth IRA left to an estate must be withdrawn within five years. Period. For a  traditional IRA left to an estate, if the deceased turned 70 1/2—the age at which a traditional IRA owner must start taking required minimum distributions–before his death, payments can be stretched out for what would have been his remaining life expectancy, according to IRS tables. That is usually more than five years, but it is probably less than the life expectancy of individual heirs, had they been named as individual beneficiaries.)

A related mistake is neglecting to name a contingent beneficiary. The problem? Should your primary beneficiary die before you, the IRA will likely go to your estate, again cutting short tax deferral. Moreover, if you name a primary beneficiary (say your child) and a contingent beneficiary (say your grandchild), then your child has the option of  ”disclaiming” the IRA in favor of your grandchild.

Still other mistakes have to do with not taking the proper required minimum distributions from inherited IRAs. If you’ve just inherited an account, read William Baldwin’s 11 Step Instruction Guide To Inherited IRAs, Inherited Roth Accounts And RMDs. And for in-depth advice on the best way to pass on a retirement account, spring for a copy of  Estate Planning Smarts by lawyer and former Forbes Senior Editor Deborah L. Jacobs.

Inherited IRA Tips (Forbes Magazine)

http://onforb.es/13LhpwX

Inherited IRA Rules: What You Need To Know

Many people who inherit IRAs are unfamiliar with the rules that apply to them. My article for Forbes magazine, “Five Rules For Inherited IRAs,” gives a broad overview of the subject. In this post I answer questions from two readers with concerns that affect other people, too.

Michael Twersky, a 26-year-old consultant in New York, asks:

I inherited a $15,000 traditional IRA from my father. As a child beneficiary, will I avoid income tax upon withdrawal if I wait until I’m 60? If not, would it be better to withdraw now while I’m still in a pretty low tax bracket?

You don’t have the option of waiting until you are 60 to take withdrawals. Generally, non-spousal IRA heirs must withdraw a minimum amount each year, starting by Dec. 31 of the year after the IRA owner died. Note: This is true whether it’s a traditional IRA or a Roth (a common misconception).

To calculate this distribution, you take the balance on Dec. 31 of the previous year and divide it by the inheritor’s life expectancy, as listed in the IRS’ “Single Life Expectancy” table. (You can find the table in IRS Publication 590, “Individual RetirementArrangements (IRAs),” which downloads here as a PDF.) Unless the account is a Roth, there is income tax on this required payout.

Don’t make the mistake, as some people do, of using the number from the table to figure a percentage. In subsequent years, you simply take the number you used in the first year and reduce it by one before doing the division.

If they choose to, IRA inheritors can draw out these minimum required distributions over their own expected life spans, as explained here. This is known as the stretch-out – a financial strategy to extend the tax advantages of an IRA. Stretching out the IRA gives the funds extra years and potentially decades of income-tax deferred growth in a traditional IRA or tax-free growth in a Roth IRA. This is a wonderful investment opportunity.

If you weren’t aware of the minimum distribution requirement and have not taken the required withdrawals, see my post, “What Happens When IRA Inheritors Miss A Key Deadline.”

6/09/2010 @ 6:00PM

Five Rules For Inherited IRAs

Before they inherited $3 million in retirement accounts from their father last year, the three middle-aged siblings didn’t know it was possible for heirs to stretch out the tax benefits of such accounts for decades. But what they also discovered after his death is that doing this is tricky–and in some cases impossible–if the original owner of the accounts didn’t fill out his beneficiary forms just so. Although their 78-year-old dad was a lawyer, “He may never have realized that it made any difference,” says a daughter, who has spent days trying to sort it all out.

Whether you’re inheriting an IRA or aiming to protect your own heirs, you’ve got to dance the IRS jig.

1. First, do no harm.

If you inherit a retirement account, don’t do anything until you know exactly what rules apply. With your own IRA you can take the money out and redeposit it in another IRA within 60 days without penalty. Not so an inherited IRA. All movement of money must be from one IRA custodian to another–be sure to specify a “trustee-to-trustee” transfer. Moreover, unless you’ve inherited from a spouse, you must retitle the IRA, including the original owner’s name and indicating it is inherited, e.g., “Daddy Warbucks, deceased, inherited IRA for the benefit of Little Orphan Annie, beneficiary.”

If two or more people are named as beneficiaries, ask the custodian to split it into separate inherited IRAs. That avoids investment squabbles and allows a longer stretch-out for the younger heirs.

2. Beneficiary forms rule.

The beneficiary form on file with the custodian of an IRA controls both who inherits it and its ability to be stretched out. If people other than a spouse are named as heirs, they must begin taking distributions from the account by Dec. 31 of the year after inheriting, but they can draw these out over their own expected life spans, enjoying decades of income-tax-deferred growth in a traditional IRA or tax-free growth in a Roth IRA. To give your heirs maximum flexibility, name both primary and alternate individual beneficiaries–say, your spouse as primary and kids as alternates or your kids as primary and grandkids as alternates. Your primary beneficiary then has the option of “disclaiming” or turning down the account, enabling it to pass to the younger alternate.

By contrast, if an estate is named as beneficiary, tax deferral is cut short. If it’s a Roth IRA, all funds must be withdrawn within five years. For a traditional IRA the same rule applies unless the former owner was already 70 1/2–the age at which a traditional IRA owner must begin cashing out. In that case the distribution rate for the heir is based on the age of the person who died, notes Rockville Centre, N.Y. CPA Edward Slott.

What if there’s no beneficiary form on file? Heirs are at the mercy of the IRA custodian’s default policy. Vanguard Group and Ameriprise award an IRA first to a living spouse and then to the estate. Merrill Lynch sends it straight to the estate. Few custodians will pass on an IRA directly to the kids without a beneficiary form.

---

3. Employer plans are different.

By federal law the money in a 401(k) goes to a spouse, unless he or she has signed a form waiving rights to it. But some employer plans will allow the funds to go straight to the kids if no spouse is living and no beneficiary form is on file. On the other hand, employers usually won’t let nonspouse beneficiaries stretch out 401(k) withdrawals. These beneficiaries should ask the employer to transfer the money into an inherited IRA. They can then divide it into separate inherited iras, says Natalie B. Choate, a lawyer with Nutter McClennen & Fish in Boston.

4. Spouses have more options.

A spouse who inherits–let’s assume it’s the wife–has an option not available to other inheritors. She can roll the assets into her own IRA and postpone distributions from a traditional IRA until she turns 70 1/2. The catch is, like other IRA owners she may have to pay a 10% early-withdrawal penalty if she takes money before age 59 1/2 from her own IRA. So a young widow should generally wait until after reaching 59 1/2 to do the rollover, says Brooklyn, N.Y. CPA Barry C. Picker. Meanwhile, she doesn’t have to take out any money until her late spouse would have turned 70 1/2.

5. Watch for distribution traps.

If the late IRA owner was 70 1/2 or older, beneficiaries must make sure the owner’s mandatory distribution for the year of death is withdrawn before doing anything else. When nonspouse beneficiaries take their own payouts, they should be aware of two quirks. First, if the estate paid estate tax, they may be able to take an itemized deduction to offset some IRA income. Second, the minimum is calculated differently than for your own IRA. You take the balance on Dec. 31 of the previous year and divide it by your life expectancy listed in the IRS’ “single life expectancy” table, rather than the table used by IRA owners. The next year you use the same life expectancy, minus a year. (With your own IRA, you take a new life expectancy from a table each year.)

Mistakes with your IRA - What Not To Do (Bankrate.com)

retirement

Avoid these 8 common IRA mistakes

By Sheyna Steiner • Bankrate.com

Retirement » Avoid These 8 Common IRA Mistakes

Mistake No. 1: Live only for today

IRAs, or individual retirement accounts, may be trickier than you think. And what you don't know can cost you money.
Many of the most common IRA mistakes occur simply because people don't know the rules governing these accounts -- of which there are many. Complex rules provide many opportunities for things to go awry, but the biggest mistake with IRAs may be not contributing to one at all.
"If you don't put anything in, you won't have anything at the end," says IRA expert Ed Slott, president of Ed Slott and Co., and author of "The Retirement Savings Time Bomb … and How to Defuse It."
Each year that you're eligible to make IRA contributions and don't is a chunk of retirement income lost. The most significant factor in the amount of money accumulated at retirement is the amount you save, not the rate of return on investments.
In general, "If you run the numbers, someone who doesn't skip contribution years versus someone who does, the person who doesn't skip years will end up with more money in retirement," says Ken Hevert, vice president of retirement products at Fidelity Investments.

Mistake No. 2: Missing tax-free growth

The most widely used types of IRAs are the Roth and the traditional IRA.
Both accounts allow annual contributions of $5,500 in 2013, but they receive different tax treatment. In a nutshell, Roth IRA contributions are made with after-tax money, while contributions to a traditional IRA may qualify for a tax deduction for the year the contribution was made.
With the Roth, taxes are paid on the front end so that in retirement all distributions, including interest and earnings, are tax-free. Conversely, the traditional IRA generally gets a tax advantage at the time the contribution is made, but distributions are taxed as ordinary income in retirement.
There is an exception to that rule. High earners who are covered by a retirement plan at work may not qualify for a tax deduction.
Big moneymakers are hemmed in on the Roth side as well.
Income limits prohibit high earners from contributing directly to a Roth. A married couple who files taxes jointly and earns more than $188,000 per year cannot contribute to a Roth, and single people earning more than $127,000 are also prohibited.
But all is not lost. Read on to see how to sidestep these apparent obstacles to IRA investing.

Mistake No. 3: Lost opportunity due to ignorance

Make too much money to contribute to an IRA? You can get around this problem.
High earners can still take advantage of the Roth IRA by contributing to a nondeductible IRA and then converting to a Roth. A nondeductible IRA is simply a traditional IRA for which there is no tax deduction, and it is available to almost everyone with wages or self-employment income.
"I do that myself. I make too much to contribute to a Roth, so I can contribute to a nondeductible IRA and convert it to a Roth," says Slott.
"It's really just moving money from a taxable pocket to a tax-free pocket. Why wouldn't everybody do it to shelter their money from future higher taxes at no cost?" he says.

Mistake No. 4: Messing up RMDs

IRS rules call for required minimum distributions, or RMDs, from traditional IRAs beginning at age 70½. Failing to take the entire amount required can lead to stiff penalties.
"The IRS can charge a tax penalty of up to 50 percent of the distribution. So it could be quite severe," says Evan Shorten, CFP, president of Paragon Financial Partners in Los Angeles.
With a Roth IRA, no minimum distributions are required during your lifetime. If you pass on and leave the Roth to a nonspouse beneficiary, that person will be required to take distributions based on their own life expectancy if they choose to stretch the tax advantage of the retirement account until the end of their own life.
Beneficiaries of traditional IRAs who choose the stretch option are subject to the required minimum distribution rules as well and face the same 50 percent penalty for neglecting to take the full distribution.

Mistake No. 5: Contributing too much

The IRS limits the amount that may be contributed to a Roth or traditional IRA in any one year. For 2013, the contribution limit is $5,500. For the 50 and older crowd, the limit is $6,500.
With contribution limits strictly controlled, putting in more than the allowed amount can trigger a penalty -- to the tune of 6 percent on the excess each year.
There are several ways to run afoul of this rule, not the least of which is simply forgetting you made a contribution earlier in the year.
Excess contributions can occur by funding an IRA after age 70½, contributing more than your taxable income for the year or contributing on behalf of a deceased individual.
"Some people may have gotten into the routine of contributing to a personal and spousal IRA, and for whatever reason, the spousal IRA continues after they're deceased," says Fidelity's Hevert.
Luckily this mistake is easily remedied as long as you catch it before taxes are filed.
"Get it out before you file and no harm, no foul," Hevert says.
"Another (option) is to essentially carry that contribution to another year, and have that count toward that tax year's contribution amount -- but you have to document that with the IRS," he says.

Mistake No. 6: IRA rollovers gone wrong

Unfortunately, paying someone to take care of your financial transactions is no guarantee of perfection.
"Advisers are generally not proactive, and they don't check things," Slott says.
Administrative transactions, such as transferring a retirement account, require attention to detail. Whether you're rolling over a 401(k) or transferring your IRA to a new custodian, not only do you need to pay meticulous attention to those little check-boxes; the customer service representative at the receiving institution also needs to be on alert.
"We see cases on this all the time. They find out the money never got to an IRA, the broker or bank moved the money and hit the wrong box, and it went to a regular account. That's a taxable distribution," says Slott.
Facing the prospect of losing the tax shelter of the IRA as well as paying the taxes owed on the entire account balance, an IRA owner has only one way of remedying rollover mistakes like these.
"You have to go to the IRS for relief, and that is going to be expensive and take six to nine months to get a decision," Slott says.

Mistake No. 7: Blowing the deadline

A trustee-to-trustee rollover isn't the only option for moving between retirement accounts. Individuals can take money out of their IRAs or take a distribution from their 401(k) when they leave an employer and put it back into a qualified retirement account without tax consequences -- as long as they do so within 60 days.
"That may seem like a long time, but a lot of people blow it. And another thing: You can only do that once every 365 days, not calendar year. Some people can lose their entire IRA because they did two rollovers in a year and didn't realize it," Slott says.
The safest bet is to do a direct transfer from one institution to another. When everything goes correctly, the money never comes out of a retirement account because the check is written to the receiving institution, not an individual. In the end, however, the burden is on the account owner to make sure their new account is set up correctly.

Mistake No. 8: Neglecting beneficiary forms

Properly filling out a beneficiary form is a pain. Personal information from the beneficiaries is needed, including birth dates and Social Security numbers. It's so easy to focus on just getting the account open and then taking care of the beneficiaries later, someday -- it's on your to-do list.
"When you open an account or transfer or convert, you need new beneficiary forms. Most don't check those things because they think someone else did or it's in their will," Slott says.
Not having a beneficiary form won't affect you after you die, obviously, but "your beneficiaries can lose valuable tax benefits, they won't be able to stretch (distributions) over their lifetime, so a lot of benefits can be lost -- or it can go to the wrong person," Slott says.
As with many aspects of these accounts, failure to properly check the details can come back to haunt you or your loved ones. When in doubt, consult a professional. But don't be afraid to double-check their work: it is your life savings, after all.

How to Plan Ahead for Alzheimers (New York Life)

Planning can ease burden of dementia

As our population ages, dementia is rapidly growing in prevalence with around 4.1 million Americans disabled by it in 2013. The U.S. Census Bureau estimates that Americans age 65 and older will double to about 72 million over the next 20 years. Rates of dementia, which is a loss of brain function that affects memory, thinking, language, judgment, and behavior, increase with age, and unless a cure or new treatments are found, costs from dementia could come close to doubling by 2040, as the aging population increases and assuming the rate of dementia remains the same. The disease is not only debilitating, it’s also expensive. Alzheimer’s Disease, one of the more severe forms of dementia, costs families and society $159 billion to $215 billion yearly, according to a new study by the nonprofit Rand Corp which was published in the New England Journal of Medicine in April 2013. Those costs include drugs, medical treatments and the costs associated with day-to-day living and they top or equal the costs for other diseases like heart disease and cancer.
Based on those stats, it’s important you consider making an estate plan before you or a loved one is affected by the disease.
The following are some important points to help guide you through the process

Who should plan?

Everyone.

When should I begin planning?

Dementia affects one’s ability to think clearly and participate meaningfully in decision making, which makes early legal, estate planning even more important. Strive to get an estate plan in place as soon as possible, while you and your loved one is still of sound mind. If you wait until signs of dementia start showing, the estate plan could be invalid because the person wasn’t of sound mind.
Advance planning can help people clarify their wishes and make well-informed decisions about health care, financial and property arrangements.

Who should I ask for help?

Since laws vary from state to state, everyone’s situation is unique, and there are several legal documents that need to be prepared, please consult a qualified estate planning or elder-care attorney.

What steps can I take to prepare?

In general, you can prepare for estate planning in seven easy-to-follow steps:

1. Create a hard-copy document that includes all the information that someone might need about you in case of an emergency. Also, include contact information for your medical, financial and legal advisors. Make sure that your loved ones know where this information is and that it is easily accessible. If you put it on your computer, make sure a loved one knows the password to access it.
2. Collect and organize all your financial information and store in a secure place. This should include basic information about your income, property, investments, insurance, and savings. As many people today maintain their accounts online, it may be best to create one document with basic information including account numbers, account management and customer service contact information. Tell a trusted family member, friend, or professional advisor how they can access this information.
3. Designate a person to handle your financial and legal issues by creating a “power of attorney” or more specifically a “durable power of attorney for finances.” This legal document names someone to make financial decisions or execute instructions based on existing directives when you or a loved one no longer can. This important step prevents having to have state courts take action and possibly seize control of financial affairs from your family.
4. Ask your attorney to create advance directives for financial and estate management. This must be created while the person with dementia still can still determine what should be done. These directives usually include four basic documents:
   • A health care proxy that empowers someone to make medical decisions
   • A living will to communicate health care wishes
   • A will that determines how a person’s assets and property should be distributed upon death, custody of minor children, and funeral and/or burial arrangements.
   • A living trust to determine how assets should be managed during disability, illness and/or incapacitation.
5. Ensure that that insurance coverage is in order and that beneficiary designations have been properly filed.
6. Consider creating a heritage document that passes the intangible wealth you or your loved one has gained over a lifetime. This could be in the form of a letter to loved ones, a collection of photographs or mementos, or simply a document that conveys values or life lessons to heirs.
7. Finally, make sure that estate and financial plans are shared with pertinent advisors, family, and friends. This will make it easier for those involved, when and if there is an onset of Alzheimer’s that requires quick decisions.

Is there anything else I need to consider?

As with all long-term planning, it is important that you review estate plans over time. Any changes in situations such as divorce, relocation, a death in the family, as well as state laws, can affect the outcome of how estate plans are interpreted and executed.
This article is for more information purposes only. Please consult your medical professional for information to your situation. For information about planning for Alzheimer’s visit the National Institute on Aging’s page about Legal and Financial Planning for People with Alzheimer’s Disease Fact Sheet.
http://www.nia.nih.gov/alzheimers/publication/legal-and-financial-planning-people-alzheimers-disease-fact-sheet

Estate Planning: Learn from a Young Mother's Tragedy (New York Times)

A Shocking Death, a Financial Lesson and Help for Others
By RON LIEBER

SEATTLE



In the days after Chanel Reynolds’s husband was hit while riding his bicycle near Lake Washington here and the best-case possibilities just kept getting worse, she was not yet consumed by grief. There were no dogged middle-of-the-night Web searches for faraway cures for his crushed upper spine or tearful bedside vigils with their 5-year-old son.



Instead, the buzz in her brain came from a growing list of financial tasks that grown-ups are supposed to have finished by the time they approach middle age. And she and her husband, José Hernando, had not finished them.



“I was finding it really hard for me to stay present and in the room and to be able to hear what the doctors were saying because I was so overwhelmed with not knowing how much money we had in our checking account, and the fact that we had our wills drafted but not signed,” she said. “I didn’t know whether I was going to be able to float a family by myself.”



In the many months of suffering after Mr. Hernando’s death in July 2009, she beat herself up while spending dozens of hours excavating their financial life and slowly reassembling it. But then, she resolved to keep anyone she knew from ever again being in the same situation.



The result is a Web site named for the scolding, profane exhortation that her inner voice shouted during those dark days in the intensive care unit. She might have called it Getyouracttogether.org, but she changed just one word.



The site offers some basic financial advice, gives away free templates for a master checklist and provides starter forms to draft a will, living will and power of attorney. There’s also a guide to starting a list of all of the accounts in your life that someone might need to access and shut down in your absence.



All of these forms and lists are already out there on the Web in various places, though rarely in one place. But there are two things that make Ms. Reynolds’s effort decidedly different.



First, the world of personal finance suffers from an odd sort of organizational failure. We tend to organize our thinking around products: retirement accounts, mortgages, long-term care insurance.



But in the real world, it’s a big life event that often governs our hunt for solutions. Sometimes, it’s a happy one, like getting married. But there are few ready-made tool kits like the one Ms. Reynolds has assembled for people considering the possibility of serious illness or death.



The other thing that compelled me to sprint here right after I stumbled across her site Tuesday night was that it is not neutered, stripped of the mess of feelings that govern much of what we do with our money. Sometimes, we just need to meet the person in personal finance.



Maybe, just maybe, hearing the story of someone who has been there, in the worst possible way, can finally push us all into action.



And we desperately need to act. According to a survey that the legal services site Rocket Lawyer conducted in 2011, 57 percent of adults in the United States do not have a will. Of those 45 to 64 years of age, a shocking 44 percent still have not gotten it down.



People who get a fatal diagnosis from a doctor at least have a bit of time to sort things out. But Ms. Reynolds and her husband had made only a few plans.



Mr. Hernando was 43 years old on the day in July 2009 when a van mowed him down while making a left turn into the path of his bicycle.



He was a self-taught engineer who played guitar in a band called Moonshine back when Seattle was the world capital of rock. At the time of his death, he rode for a cycling team and was a Flash developer working at the highly regarded firm Frog Design.



Given all that vitality, death was the farthest thing from Ms. Reynolds’s mind when she kissed him goodbye after failing to persuade him to take their son along for the ride. Which was why she was confused when she checked her phone from a party two hours later and found 14 missed calls, none of which were from numbers she recognized.



After his death, this much was clear: The family with the six-figure income and the four-bedroom house that they had bought in the Mount Baker neighborhood one year before had a will with no signature, little emergency savings and an unknown number of accounts with passwords that had been in Mr. Hernando’s head.



What saved Ms. Reynolds, now 42, from ruin was life insurance. They didn’t have a lot, but they had just enough (a couple of hundred thousand dollars in the end) to keep her from having to go right back to work as a freelance project manager and sell the house at a big loss right away. It helped pay for the education of their son, Gabriel, who is now 9, and for Mr. Hernando’s daughter from a previous relationship, Lyric, who is 16 and still close to Ms. Reynolds and her brother. Ms. Reynolds now carries a $1,000,000 term policy on her own life.



So she did not go bankrupt. But the lack of a signed will ended up costing her thousands of dollars in unnecessary legal fees. And then there was the extended period of suspended animation, where she was trying to figure out where she stood with insurance and retirement accounts and phone bills but could not get the information that she needed without account numbers and passwords.



She describes that netherworld as a slow death by a thousand paper cuts. “Sometimes it was the one little, last thing that put me over the edge,” she said.



“I’m trying to figure out how best to take care of my son and when I can go back to work and how much I’ll lose on the house. And if I have to spend 30 minutes following up with some bank that won’t take a check from him, I just don’t have the extra 30 minutes to do this again.”



But she did it again and again, dozens of times, following the same “Hello, my name is Chanel and my husband just died and I need access to X account” script. Once she had enough emotional distance from it all, she created her Web site, where she tries to persuade others to take a couple of hours now to spare themselves countless hours of hardship later.



It’s true that her efforts are not unprecedented. Nolo helped pioneer a do-it-yourself legal movement, and its state-by-state materials are thorough. Several commercial sites can help store and sort your documents and accounts, including organizemyaffairs.com, estatedocsorganizer.com, legacylocker.com, aftersteps.com, thedocsafe.com and safeboxfinancial.com.



There are a few things about Ms. Reynolds’s site that seem unique to me, though. The first is her raw insistence on considering what it means if you’re having trouble finding the right people to serve as your estate’s executor or to inherit prized possessions.



“If you are at a loss for whom to name, get out there and tighten up your friends and family relationships,” she writes on the site. “Find some better friends. Be a better friend. This is everything. This means everything.”



It did for her, at least. “I felt really lucky when I went down my favorites list on my iPhone at the hospital, and everyone showed up,” she said. Hospital staff eventually had to gently inform Ms. Reynolds that her large group of supporters was getting in the way.



She also urges people to leave traces of themselves. This is particularly crucial for parents who fetishize every piece of preschool artwork and capture every meaningful moment but rarely come out from behind the camera themselves.



Forget about just preserving memories of your children for yourself. What about the things that they may need to remember you by?



I asked two lawyers for feedback on Ms. Reynolds’s efforts. Bill Cahill, a lawyer who writes wills for many people who live near me in Brooklyn, said that her legal templates were infinitely better than nothing.



He did lament Ms. Reynolds’s choice of a name for her Web effort. “It seems to me that the whole process deserves more dignity,” he wrote in an e-mail message.



While a private admonition to get it together may well be worthwhile, he added, “the coarseness of the communication is not appropriate for the public square.”



Ms. Reynolds considered this but decided that she needed to be honest. “Those were actually the words that came out of my mouth in the I.C.U.,” she said. “To try to come up with another word to describe something that is part of my own personal experience is too hard to do for me, and it doesn’t, for me, communicate the level of importance and intensity and emotion that comes along with the content.”



Diana S.C. Zeydel, a shareholder at Greenberg Traurig in Miami and chairwoman of the estate and gift tax committee for the American College of Trust and Estate Counsel, applauded Ms. Reynolds’s consciousness-raising efforts.



But she worried that some people who adopted Ms. Reynolds’s sample will (from a template derived from her own Washington State will, which she wrote with the help of a lawyer) as their own could end up worse off than if they had nothing, depending on their circumstances.



It is not surprising that a lawyer would urge you to consult a lawyer, and Ms. Reynolds is not at all opposed to anyone doing so. She also doesn’t accept the idea that anyone even remotely like her and her late husband cannot afford it. “If people can save to go on vacation, they can save to do this, too,” she said.



Ms. Reynolds’s Web site is only four days old as of this writing, and within 24 hours it had been shared over 100 times on Facebook.



She has already heard from a social worker in Santa Fe, N.M., who was near retirement and had not yet pulled her financial records together and a 22-year-old with no children who is now considering a living will.



So already, Ms. Reynolds feels that it’s been worthwhile to share her own experience, if only to help people feel the relief that she now feels because she has her act together.



“It takes way more energy to worry about something than it does to be relieved,” she said.



“It makes a lot more space for joy and gratitude and happiness. And the rest of your life.”

Insurance Companies Sued for Knowingly Stiffing Heirs ( from LifeHealthPro )

Prudential, MetLife Sued over Death Master File

By Arthur D. Postal

February 1, 2012

State efforts to collect on unclaimed property held by insurers has mushroomed into private action lawsuits filed in Illinois, Ohio and New York against Prudential and MetLife.

The lawsuits are coming to light against the background of a hearing Thursday on inaccuracies related to the Death Master File mainted by the Social Security Administration.

The DMF is the primary research tool being used to allege that insurers did not follow applicable state law on unclaimed property, either by not being aggressive enough in seeking to find beneficiaries of life insurance policies, or, in the alternative, turn the money over to the state.

In a suit filed in Chicago, Total Asset Recovery Services, based in Auburn Hills, Mich., alleges it discovered a "massive fraud" by Metropolitan Life Insurance and Prudential Financial.

The suit alleges that the two firms kept more than $524 million in unclaimed life insurance money that should have been turned over to Illinois.

And, a class action suit alleging securities fraud was filed in Manhattan Jan. 12 against Metlife by the City of Westland Police and Fire Retirement System, Westland, Mich.

The suit alleges MetLife made “false and misleading statements” regarding its financial statements because it took a charge in the third quarter of 2011 related to a determination that it owed money by either not paying off policies to proper beneficiaries or turned the money over to the appropriate states under escheat laws.

And, an Ohio state court based in Cleveland Tuesday dismissed a complaint against Nationwide Insurance Company in which a life insurance policyholder who is 71 years-old filed suit.

The plaintiff said he filed suit out of concern that his death is imminent and he is fearful that because Nationwide allegedly “has failed and continue to fail to make reasonable attempts to determine when the beneficiaries of a life insurance policy are entitled to death benefits.”

The plaintiffs fear … “that as their deaths are impending they fear that that their life insurance policies will not be honored.”

The suit asked that Nationwide be required to make at least annual DMF searches for insureds with more than a 70% chance of having died.

The court dismissed the suit, on the grounds that (a) plaintiffs lacked standing because their alleged injury was too speculative and (b) the duty plaintiffs sought to impose was foreclosed by the terms of their policies.

The plaintiffs have appealed to the Ohio Court of Appeals.

The Illinois case was filed almost a year ago but only unsealed earlier this month.

It is a so-called “qui tam,” or whistleblower complaint in Cook County Court.

The suit said MetLife and Prudential "filed false records omitting these unclaimed funds."

It says the insurers should be fined more than $1.5 billion under the Illinois False Claims Whistleblower Reward and Protection Act.

Tom Prescott, equity-owner and spokesperson for Total Asset Recovery Services LLC, said that with regard to the suit, the Illinois attorney-general’s office has said that it will soon submit for the court's consideration a motion to intervene and simultaneously dismiss the suit because it is negotiating a settlement with MetLife and Pru.

Prescott complained that it is likely that Illinois will settle “for pennies on the dollar.”

He said that, “We think this is incredulous and unfair to the citizens of Illinois compared with what they should receive given the companies' documented fraudulent activities in this area) after having utilized our data findings and supporting documentation to extract the relevant monetary and policy concessions.”

Estate Planning Blunders of the Stars (Investment News)

Infamous estate fights
By Andrew Osterland
Investment News
September 11, 2011
You don't have to be a celebrity to make a famous mess of your estate planning, but it might help, according to Danielle and Andrew Mayoras, estate-planning attorneys from Troy, Mich.

They use well-publicized battles over the estates of famous people to illustrate why regular people need sound estate planning. Several famous cases are detailed on their website TrialAndHeirs.com.

“Even when there's not a lot of money involved, people fight over it, particularly in this economy,” Ms. Mayoras said.

The following estate cases provide good examples of what not to do:

Former entertainer and California congressman Sonny Bono, who died in a skiing accident in 1998 at 62, didn't have a will. His estate is still being contested in court by, among others, former wife Cher.

Lesson: Don't put it off.

Retired Supreme Court Chief Justice Warren Burger may have been a great legal mind, but he wasn't an estate attorney. He prepared his own will and cost his heirs huge sums in court expenses and taxes.

Lesson: Don't do it yourself.

James Brown, the Godfather of Soul, wanted to leave most of his estate to charity, but he never updated his will, which is being contested by the mother of one of his children.

Lesson: Update your estate plan for life-changing events — even the purchase or sale of a business.

Zsa Zsa Gabor, the ailing 94-year-old celebrity may have another child, if her ninth husband has his way. Prince Frederic von Anhalt, who has power of attorney for his wife, allegedly wants to arrange for an egg donor, a surrogate mother and artificial insemination to allow it.

Ms. Gabor's only daughter, Francesca Hilton, alleges that the prince has been spending her mother's money unwisely.

Lesson: Choose the right person to have power of attorney for you.

Nine Most Common IRA Mistakes (the Dolans)

Are You Making These IRA Mistakes?
by Ken Dolan September 2, 2009 10:26 AM
Posted in: Invest Wisely IRA Retirement Center

For millions of Americans, an Individual Retirement Account is a critical piece of their retirement plan. If you are eligible for an IRA, you should be contributing to it each and every year, period.

But if you want to make the very most of your IRA, you must avoid the mistakes that cost many people dearly.

Let's take a look at the nine most common.



IRA Mistake #1:
Not Contributing Because of Stock Market Volatility
We heard from LOTS ofpeople over the last few years who stopped contributing to their IRA because of market volatility. DON'T you be one of them!

No matter what the market does, you should take advantage of the important benefits your IRA offers. First, you still get an important tax break on the dollars you are contributing. Plus, if you work for a company that offers matching IRA contributions, you are actually making money. Why on earth would you give up FREE money from your boss??

IRA Mistake #2:
Not Knowing the Contribution Limit
Sometimes the most common mistakes are also the easiest to correct. Not knowing your contribution limit is a common mistake that can cost you thousands.

On one hand, if you don't contribute the maximum allowable amount into your IRA, you are missing out on some good tax deductions and tax-deferred earnings. On the other, if you over-contribute, you will have to pay a stiff penalty.

For 2011, the IRA contributions limits are as follows:

If you are under the age of 50 by the end of 2011, you can contribute $5,000.? That amount can be split between a Roth and traditional IRA if you'd like.

If you are over the age of 50 by the end of 2011, you can contribute $6,000.


IRA Mistake #3:
Not Naming a Beneficiary
When you set up an IRA, you are not required to name a beneficiary. Name one anyway!

If there is no beneficiary on your IRA, the money in the account will typically have to go through probate, which can be an expensive and lengthy process. Also, the funds will be paid out over the remaining life expectancy of the deceased (or over five years), which will likely be shorter than a named beneficiary's life expectancy. This means the money is disbursed more quickly, putting a heavier tax burden on whoever receives the money.

Avoid this major IRA mistake and name a beneficiary so you can be certain where your IRA will go, and how quickly it will be distributed upon your death.

IRA Mistake #4:
Not Contributing to a Spousal IRA
A spousal IRA is an important retirement planning tool WAY too many people overlook. If you or your spouse does not work, or works part-time and has no company benefits, you can open a spousal IRA in addition to a regular IRA. You can double your overall IRA contribution by using a spousal IRA in addition to the standard IRA.

IRA Mistake #5:
Not Starting Your Withdrawals on Time
Traditional, SEP and SIMPLE IRAs all require you to take withdrawals annually after you turn 70-?. (Special note: If you have a Roth IRA, there is no mandatory withdrawal age.)

If you don't take a mandatory withdrawal on time, you'll pay dearly for this mistake. You will be required to pay a 50% penalty on the required withdrawal amount. Ouch! What a waste for an easy-to-avoid mistake! Make your withdrawal at the right time and keep your hard-earned money to yourself.

Remember: Your first withdrawal is due by April 1 the year after your turn 70 1/2, and you'll have to take another one by December 31 of that same year.




IRA Mistake #6:
Not Withdrawing Enough
So now you know that traditional, SEP and SIMPLE IRAs require you to take annual withdrawals after you turn 70 1/2. But you can't just take out five bucks and wait till next year! The amount you must withdraw each year is dictated by formulas based on your life expectancy, your current age and the amount of money in your IRA account.

Check with your financial advisor or use the tables found in Appendix C of IRS Publication 590 to determine your minimum withdrawals. Make a mistake and you'll face a stiff 50% penalty on the difference between what you withdrew and what your required minimum distribution really was!


IRA Mistake #7:
Forgetting the Contribution Deadline

December 31 is the last day of the year, right? But not when it comes to contributing to your IRA! You have until April 15 of the following year, or the day that you file your tax returns, to make a contribution to your IRA for that tax year.

Remember, to make the most of your IRA contribution, we recommend that you fully fund your IRA as early in the year as possible. But when it comes to making IRA contributions, late is better than never!

Don't make one of the key IRA mistakes by forgetting about that extended contribution deadline!

IRA Mistake #8:
Mishandling an IRA Rollover
If you are switching jobs or you are an IRA beneficiary, you'll need to roll over those IRA funds. IRA rollovers don't have to be confusing or complicated, but you do need to follow some very specific rules.

Here's how to avoid two common IRA rollover mistakes. First, your rollover must be completed no more than sixty days from when the money is withdrawn from the original account. Anything not rolled over within those sixty days becomes 100% taxable income. You don't want that to happen!

Second, remember that you are only allowed one rollover - into or out of an individual IRA - per year. There is no bending of this rule, so follow it closely or you'll get stuck paying a hefty penalty!

IRA Mistake #9:
Not Knowing Spousal/Non-Spousal Inheritance Rules
One of the big IRA mistakes is not realizing the difference between inheritance rules for spousal and non-spousal beneficiaries. If you are a spousal beneficiary, you can either switch the name on the IRA or roll the funds directly into an IRA you already have. Either way, the money is viewed as if it has been yours all along (you can contribute to it and will be required to withdraw from it).

If you are a non-spousal beneficiary, the money in the IRA is still yours, but you are not able to roll it over to your own IRA, and you are not allowed to contribute to it.

Copyright © 2011 Dolans.com. All Rights Reserved.

Estate Planning Clear and Simple (NY Times)

March 24, 2010
Assemble a Paper Trail, and Make Sure Your Heirs Can Follow It
By PAUL SULLIVAN
NO one wants to think about dying. But refusing to look at the documents that will determine where your money goes when you pass away will not make you live longer. It will just make sorting through everything more difficult for your heirs.

Any review of financial health needs to take into account the legal documents that govern our assets and our lives, if we become incapacitated or die with minor children.

Holly Isdale, managing director at Bessemer Trust, said she likes to break down this task into “high priorities and someday-maybes.” And this seems as realistic a strategy as any to force yourself to review these documents.

WILLS AND TRUSTS The whole notion of the sanctity of a will has been thrown into disarray by the expiration of the estate tax. But the bottom line is that, before you can review your will, you need to have one. And 65 percent of Americans do not, according to a survey released last month by Lawyers.com.

There is no excuse for this. A basic will is cheap and can be facilitated through online sites like legalzoom.com.

Many people think that if they die without much money, their heirs will simply inherit it. They will, eventually. But first the state will appoint a conservator and hire lawyers, the costs of which will be deducted from your estate and ultimately decide how your money is passed on, said Edythe M. DeMarco, first vice president at Merrill Lynch Global Wealth Management. A simple will avoids this.

Once you have a will, it is crucial to keep it up to date. This should be done every five years or whenever there is a major life event. “The pitfall with the will is, they set it and forget it,” said Ken Kilday, a wealth manager at USAA.

In a year when there is no federal estate tax — though there will almost certainly be one in 2011 — reviewing wills and trust documents should be on everyone’s to-do list.

Reviewing both wills and trusts for someone with substantial assets is particularly important this year. Even though there is no estate tax, wills can have clauses that distribute assets to trusts as if the tax still existed. This could end up leaving some heirs too much money and others none at all. And since a federal estate tax will return next year even if Congress does nothing about it, there will be a need to review everything again in 2011.

BENEFICIARIES The form that can often wreak havoc on a family is the beneficiary designation form. It determines who will get your insurance and retirement accounts, so-called contract assets as opposed to financial assets. Many people do not know that it overrides a will.

If you named your brother on your beneficiary designation form for an IRA and die 30 years later without having changed it, your brother, not your spouse or children, gets it.

This happens more often than you would think, advisers said. The reason is forgetfulness. “The worst thing from my perspective is to try to explain to a widow that her deceased husband’s former spouse actually inherits the IRA,” Mr. Kilday said.

Whether this is a high-priority or someday-maybe issue depends on your personal life. But one thing everyone should have is a contingent beneficiary, in case the first one dies before they do. Ms. Isdale said she suspected that many people neglect to name one at the time because they plan to do it later.

HEALTH CARE PROXIES AND GUARDIANSHIP These are two high-priority documents because they address something far more important than money: what happens to you if you are incapacitated, and who cares for your children if you die.

With both, it is essential to make sure the person you have designated is still someone with whom you are in close contact. Often a guardian is named at a child’s birth, but the families move away or lose touch. When it comes to health care, you should also sign a HIPAA, or Health Insurance Portability and Accountability Act, release form so your health care proxy can have access to your medical records.

A related issue is the traditional power of attorney. Many people talk of having a durable power of attorney, but Mr. Kilday points out that if that were the case that person could act on your behalf immediately. What you want is a springing durable power of attorney, which is activated by events you detail.

This brings the conversation back to wills. “The other major pitfall is people have a power of attorney and they think that means they don’t need a will,” Mr. Kilday said. “The problem is that power dies with you.”

TITLING OF ASSETS This is a someday-maybe issue because it can be time-consuming and expensive. For people who would have been subject to the old federal estate tax, for example, it would have made sense to retitle assets like a home in just one name. But, as Ms. Isdale pointed out, not all spouses feel completely comfortable ceding control.

Another issue is the well-meaning parent who, for help with her financial matters, puts one child on her accounts. When she dies, those accounts belong to that child alone, even though her will says the money should be split among all three children.

Even if that child wants to make things right with siblings, he could end up using some of his gift tax exemptions to do so. “You can disclaim it, but it’s messy,” Mr. Kilday said.

SINGLES AND SAME-SEX COUPLES The law always looks for legally recognized family members in dispensing with your estate, but who is going to take care of your affairs if you are not in a traditional marriage?

Someone who is single may want to name a health care proxy who lives closer than a parent who could be thousands of miles away.

Ms. DeMarco said same-sex couples need to be particularly vigilant in their estate and proxy planning. She noted that until a few years ago in Rhode Island, where she works, a domestic partner could not make funeral arrangements; it had to be done by a family member.

Health care proxies are important, but so, too, are the documents that will direct assets to a partner. “For a nonfamily member, it’s a hard and difficult legal road,” she said. “In absence of these documents, the state is going to name the beneficiary, and the law looks to the bloodline.”

BALANCE SHEET If your family cannot find the documents you have worked hard to update, you may have wasted your efforts. Ms. Isdale suggested drawing up a balance sheet that lists the basic information about your assets. She called this a high-priority item and suggested that a more exhaustive one should be on the someday-maybe list.

Mr. Kilday said he advises clients to include a final letter of intent. It has no legal standing, but it can help guide your heirs with what you want done after you’re gone. “Clients kind of chuckle and say, ‘It doesn’t matter to me, I’m dead,’ ” he said. “But from the kids’ perspective they want one last chance to respect and honor you.”