Designated ‘Drivers’ — 4 Lessons Learned

 Your best laid plans can quickly go awry if your beneficiaries are clueless.

For the past several months, I’ve been dealing with the disposition of my late mother’s estate. In the overall scheme of things, it is neither large, nor particularly complex. As I’ve noted before, Mom did a solid job of not only managing her finances while alive, but in terms of making sure that I (as eldest perhaps, but more specifically as executor) was aware of the various insurance policies, retirement accounts and property. 

In that respect, she was doubtless “better” than many parents in discussing such matters before her passing (though none of that happened until after my father passed). Moreover, despite their modest means, they set up a living trust back when my Dad was with us — specifically to avoid the complexities of going through probate in an effort to make it easier for us. And prior to her passing, Mom made sure I had all the account numbers and phone numbers, and we set up online access to everything — allowing me to help her manage those accounts from afar well before her passing.

That said, and despite all that preparation — there were some “bumps” along the way. Here’s what I learned.   

Lesson #1 — Make sure that you share (or get) information about insurance, retirement and property with trusted individuals/families while you are still able.

Now, for all the headlines about dead people on Social Security rolls, they were “johnny on the spot” in notifying — well, everyone — about Mom’s death. Her pension stopped — immediately — as did access to her online insurance and retirement accounts. That is, of course, a good thing from a fraud standpoint. There are miscreants aplenty who troll death notices and look for opportunities to take advantage of those situations. That said, if I hadn’t already known what accounts Mom had set up — I wouldn’t have had a clue as to how to go about the process of closing and cashing them out.

Lesson #2 — Make sure that you know WHO the designated beneficiary(ies) are for each of the insurance, retirement and properties in question.

Now I had assumed — based on prior conversations that all of Mom’s holdings were set up in the name of the trust. And, armed with account numbers, I proceeded to file claims on that basis.[i] Mind you, everybody wants an original copy of the death certificate — and that means that you have to ship it to folks via a traditional delivery service (FedEx, UPS, USPS, etc.). And, as you might expect, they also want some evidence that you are legally positioned to act on behalf of the trust (though this they will accept electronically). This all takes time.

Then I started getting mail BACK from various entities that said the trust was NOT the beneficiary (this is all via mail, so weeks are passing). Of course, when I called to inquire who WAS the beneficiary — well, they wouldn’t tell me, as my legal status of trustee mattered not (nobody talks to anybody (else) until they get the aforementioned death certificates).

Fortunately, as it turned out, Mom had designated — probably back to the time before she had the trust established — her children as beneficiaries. Being one of those, I was then able to pivot — and got a response. They wouldn’t confirm the remainder of the beneficiaries — but knowing Mom, I was pretty sure that she had named each of us as beneficiaries (she had), and so I was able to proceed with my claim (though my siblings had to proceed “individually” with theirs). 

Lesson #3 — It doesn’t “pay” to wait.

With regard to the latter, my experience was that, despite the rapid (if not immediate) cessation of access to Mom’s accounts, the notification to beneficiaries was slow (and, as noted before, via USPS). Moreover, people tend to move over time, and so the beneficiary address that was provided back in 2006 might no longer be accurate. The claim forms, when they did arrive, were bulky, confusing and intimidating — with little reference as to which account was involved, or what kind of account it was. In sum, it would have been easy to see it as junk mail. 

It didn’t help matters that, over the years, consolidation in both the insurance and retirement industries meant that those massive forms came from companies whose name didn’t match the original source (and in two cases, they now bore the same name, but not that of the original companies). As noted above, and through no fault of these companies, the addresses on file were out of date (though one managed to find its way to a nephew of a different brother — in a completely different state — and we still have NO idea how THAT happened).

More than that, my well-educated siblings struggled to make heads or tails of the options.  In their defense, you had to wade through 12 pages of “explanation” to get to those options — and then even this industry “insider” found it to be a head-scratcher. Seriously, do the people who draft these forms have a clue what plain English looks like (p.s., annuity companies really make it hard to request a straightforward lump sum)?

Lesson #4 — You can count on customer service, but only during business hours.

Now, and without exception, everyone I spoke with at the various firms was kind, understanding and helpful — in spirit, if not in what they were allowed to tell me. Much of the claims filing (except for the death certificate) could be done online. Everything — eventually — worked out. 

But if you do have a need to talk to someone at the firms, know that dealing with these matters is something that’s hard to do during “regular” business hours (the one exception — Mom’s 403(b) retirement account!). Fortunately, my “retired” status helped, but for those still working a full-time job, note that most didn’t offer 24-hour — or even evening hours — customer support. Budget your time accordingly. 

And my thanks here to all of those customer service reps who were understanding, kind and patient.

• Nevin E. Adams, JD

Trust “Company”

I saw an interesting event headline the other day. It said simply, “Trust is an economic stimulus package.”

A short, and somewhat simplistic, assessment to be sure. And yet, IMHO, one that may well lie at the heart of our current economic turmoil; trust – or perhaps more accurately, the lack thereof.

Trust was surely at issue when the financial system ground to a halt last fall, with investors anxiously pulling back funds from institutions that were similarly concerned about the financial integrity of those to which they had extended credit. In response, the federal government first tried to broker deals between troubled firms and what turned out to be soon-to-be-troubled firms…and then decided to sit on the sidelines when the second “opportunity” emerged, leaving everyone to wonder if the government would step in or not – and if so, how (and how much)? Under stress (if not duress), the first big bailout was pressed through – but the articulated plan for its dispersal was abruptly set aside – and before you know it, $350 billion of our money seems to have vanished with no more apparent impact than a cupful of water poured onto a raging inferno.

Since then, we’ve had a change in administrations, and while some surely remain hopeful, trust remains elusive. Nor, IMHO, has there been much, if any, effort to nurture a restoration of trust. Let’s face it, the choices some of firms have made regarding compensation packages and activities (including their mode of transportation to Congressional hearings) in this environment do demonstrate an incredible disregard for the sensitivities of the times (in their defense, some legitimate business activities are being caricatured as abuses, and not every dollar spent by these firms came from the taxpayer’s pockets; however, the resonance of those criticisms is indicative of the climate of mistrust). Many of those same members of Congress that evidence such outrage about those activities turn around and, with a straight face, claim that they’ll “stimulate” the economy by chumming in projects to an “emergency” package that are surely every bit as wasteful and inappropriate for the times as the corporate activities they publicly disparage. And then they have the temerity to tell the nation that the package contains no “earmarks.”(1)

Advisers know first hand how important trust is in cultivating relationships, both at the plan sponsor and participant levels. Unfortunately, trust is one of those things that can be wiped out in an instant – and once damaged, even under the best of circumstances, can take years to restore. Those entrusted with other people’s money have perhaps a unique obligation, for when they violate that trust, that impact can be felt beyond that one individual, but even to the system(s) they represent. For example, clients of Bernie Madoff – or clients of firms that were clients of Bernie Madoff – will surely, for a time anyway, be less trusting of their advisers – and who can blame them? When might participants – most of whom seem, for the moment, anyway, to be willing to stick with their current investment plans – decide that they can’t afford to keep throwing good money into a market that continues to erode, not reward, their hard-earned savings? How much of their patience with that result is a function of the trust they have invested in you?

I think we can all accept the notion that these are extraordinary times, and that even the so-called experts aren’t exactly sure what will “work,” or how much of what will work will be required. I think we can even accept some misguided attempts to do the right things – even if they turn out to be the wrong things – so long as they are well-reasoned, well-intentioned, and well-articulated (or at least explainable).

What we really can’t tolerate - while we’re trying so hard to pull together – are the kinds of attitudes and behaviors that keep pulling us apart.

- Nevin E. Adams, JD


(1)One man’s definition of “pork” is another’s “much needed expenditure of government funds” (and always has been), and the definition of “earmark” remains more art than science. For some, the Congressional definition of an “earmark” wouldn’t include specific projects that are included in legislation that is voted on (as opposed to specific projects that are added on AFTER legislation is adopted) – and that is apparently the definition being applied when we’re told that the bills being signed in recent days are bereft of earmarks. It’s not a wholly illegitimate position – but, IMHO, one that is at least “nuanced.”

Note that the Congressional Research Service defines earmarks as "Provisions associated with legislation (appropriations or general legislation) that specify certain congressional spending priorities or in revenue bills that apply to a very limited number of individuals or entities. Earmarks may appear in either the legislative text or report language (committee reports accompanying reported bills and joint explanatory statement accompanying a conference report)." Personally, I think that is consistent with the way in which most Americans would see the term accurately applied. Feel free to disagree.