Help Your Family Claim Retirement Benefits
by
Melanie Cullen
Make sure your survivors can access your retirement and pension accounts.
There are good reasons to make a record of your retirement accounts: After your death, your survivors will want to file claims for any outstanding benefits, and if you ever become incapacitated, the person in charge of your finances will have to manage those accounts for you. (For more on appointing someone to manage your finances if you can't, see Durable Financial Power of Attorney: How it Works.)
To make these tasks easier for your loved ones, you should keep a list of basic information about your retirement accounts, pension plans, and Social Security benefits. This article gives you tips on how to do that. First, however, here are some essential rules about what happens to retirement benefits after your death.
To learn more about organizing all of the documents relating to your estate, not just retirement accounts, see Nolo's Getting Organized for Your Family Resource Center.
What Happens to Retirement Accounts When You Die?
Each of your retirement accounts and pension plans should name a beneficiary. (Don't use your will to name beneficiaries for your retirement plans. For more on what not to include in your will, see What a Will Won't Do.) Money remaining in the accounts at your death (and any pension payments due to you) will pass directly to the beneficiaries you have named, without the hassles and expense of probate court.
 | Must the beneficiaries of a 401(k) plan pay income tax on withdrawals? |  |
For some plans, including 401(k)s and most pension plans, the law requires you to name your spouse as beneficiary unless he or she signs a form giving up that right. For IRAs and employer profit-sharing retirement plans, you may name any beneficiary you choose. (If you live in a community property state, however, keep in mind that your spouse has a legal right to half of the money that you earned during marriage.) If you're married and you don't want to leave all your retirement benefits to your spouse, make sure you know the legal rules.
| Don’t Name Your Living Trust as Beneficiary |
| If you have created a living trust to avoid probate, it's generally not wise to name the trust as the beneficiary of your retirement accounts. Retirement funds are already exempt from probate, and by naming your trust as beneficiary, inheritors are likely to lose some of the benefits and flexibility they would otherwise have. For basic information about living trusts, see the Living Trust FAQ. |
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Your Family May Be Eligible for Social Security Benefits
After your death, your family may be entitled to Social Security survivor benefits. Eligible family members will receive monthly payments -- as much as the full retirement amount that would have been paid to you.
Your spouse qualifies for benefits if he or she is:
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