If any benefits remain in your retirement accounts after you pass away, you probably would want your family members to get access to them. Also, if you lose the ability to manage your finances before you die, you may need the person who holds a financial power of attorney for you to have access to your accounts. Thus, you will need to keep records of the various benefits to which you are entitled. Each account and plan should have a beneficiary so that the benefits can pass to them without going through probate.
You should name the beneficiary in the account paperwork rather than naming them in your will, which would require the funds to go through probate. Sometimes a spouse must be the beneficiary unless they agree to waive that right. If you have an IRA or certain other types of plans, however, your spouse does not need to be the beneficiary. (They still will be able to receive half of your marital property upon your death if you live in a community property state, such as California.) You should not name an instrument like a living trust as the beneficiary of an account. The contents of the account can pass outside probate without taking this step, and it may restrict the benefits that your loved ones receive.
If naming a non-spouse beneficiary, it may be a good idea to have a spouse (or ex-spouse) waive their right to benefits in writing. Divorce may not always terminate an ex-spouse’s right to retirement benefits.
Keeping Records of Benefits
You should make an effort to put together a list of every retirement account and plan, including plans that do not yet pay benefits. Many people have a broad range of plans, including IRAs, Roth IRAs, SEP IRAs, defined benefit plans and pension plans from their employers, 401(k) or 403(b) plans, and profit-sharing plans. Any Social Security retirement or disability benefits should be included as well, including future benefits and dependent benefits for family members. You should make sure to provide the account number and any other information required to access the plan, in addition to the contact information for anyone who manages the plan. Also, you should include the place where your family members can find your plan statements.
Once you have made this list, you may need to update it over time. You should keep the list in a safe place, while telling your loved ones where they can find it. The person who will serve as the executor of your estate or manage your affairs under a financial power of attorney should know where it is.
Simple Benefit Records
The name of each account, plan, or benefit
Account numbers or other access information
The name and contact information of the managing person or entity
Where to find benefit statements
Social Security Benefits for Family Members
One type of Social Security benefits is known as survivor benefits. These will consist of monthly payments to certain family members after your death. Most often, the eligible family members are your spouse and any minor or disabled children, but they can also include an ex-spouse, grandchildren, stepchildren, and parents who are financially dependent on you. The benefits will consist of the same amount that you would have received. Your spouse or minor children can receive a set payment of $255 as well.
To be eligible for survivor benefits, your spouse generally must be 60 or older, or 50 or older with a disability. A spouse also can qualify if they are caring for a child of yours who is under 16 or receiving Social Security disability benefits. For a child to be eligible, they generally must be under 18, or between 18 and 19 while attending secondary school full-time. A child also can qualify if they are an adult but suffering from a severe disability that began when they were no older than 21.