Beneficiaries to an annuity

[dtilque]

One of my relatives recently died and I’m one of many beneficiaries named for an annuity she had. I was actually unaware of this until I received a claim form from the insurance company that sold it. Since then, I’ve learned that all beneficiaries must return their claim form before the money is paid out. This got me to thinking about possible problems. (Note that I don’t expect any of these problems to happen in this case; I’m just curious.)

First, is this requirement usual for such instruments? I expect it is, but I suppose it’s possible only this insurance company has it.

Second, what happens if one or more beneficiary fails (either deliberately or otherwise) to return their claim form? Say they don’t really need the money but they want to deny it to one or more of the others. Or perhaps a beneficiary is in parts unknown, no forwarding address etc. Does the insurance company just sit on the money indefinitely or are there rules about when they pay out to those who did file their claim form?

Sorry if this is in the wrong forum, but I wasn’t sure if it goes here or IMHO.

[bob_2]

This article may be a start, especially in view of the tax implications.

http://www.redding.com/business/know-youroptions-ifinheritingannuities

I also found this: Essentially it says that the original set-up should have taken the problems you describe into account.

~in the absence of a named beneficiary, the death benefit would become part of your estate and go through probate.
To avoid this and to retain control of your annuity’s benefits, it’s prudent to name one or more “contingent” beneficiaries. They’d receive the death benefit if your primary beneficiary died before them.

[dtilque]

Thanks for the link. It doesn’t answer my question, but does (in a general way) tell me why there were various options which I didn’t understand on the claim form.

But that quote doesn’t really help. I’m thinking of cases where one of the beneficiaries is living, but refuses to submit their claim form. Or they are probably living but their whereabouts are unknown. But mostly the first instance, people who don’t file the form just to make life difficult for the others.

[Isilder]

The annuity can be paid out before probate, if the beneficiaries cooperate.
Otherwise it would be finalised by executor during/for probate…

The annuities named benificiaries should be taken to override a will, but there’s the benefit of not co-operating with the insurance company and doing forms… having the excecutor of the will / trustee of the estate assess if the annuity’s beneficiaries are the decadents (Deceased subject) intention at the time of his death…

[Tim_T-Bonham.net]

@dtilque

Does the insurance company just sit on the money indefinitely …

No, surely you can’t believe that an insurance company would do this! Or just make it complicated & a lengthy delay before they have to pay out the money? Say it ain’t so.

[dtilque]

@Isilder

The annuity can be paid out before probate, if the beneficiaries cooperate.
Otherwise it would be finalised by executor during/for probate…

The annuities named benificiaries should be taken to override a will, but there’s the benefit of not co-operating with the insurance company and doing forms… having the excecutor of the will / trustee of the estate assess if the annuity’s beneficiaries are the decadents (Deceased subject) intention at the time of his death…

Psst! I think you mean decedent, there. Unless the decedent was also decadent…

OK, so the rule is, if everyone doesn’t file their claim, the annuity is payed to the estate and the executor gets to pick and choose who gets to inherit. Hmm… lots of opportunity for chicanery there, but no more than the inheritance/executor business as a whole.