It's not the most pleasant topic to think about, but it is important to make plans for your money in the event of your death.
Each financial institution, investment company, retirement plan or insurance broker will have a beneficiary form for you to complete. If you have an individual account and you do not select beneficiaries and your account is not joint with rights to survivorship, the funds that remain at the time of death will be made payable to your estate, not a specific person.
If the financial institution is not contacted after a death and the account goes dormant, the funds remaining in the account will be sent to the state department of revenue as unclaimed property after 5 years of no activity. The state will then hold the funds, and when they do, it is called escheatment. Unclaimed property includes, but is not limited to: wages, savings accounts, customer refunds, accounts payable, insurance payments, shares of stock, escrow funds, royalties and contents from safe deposit boxes. Most property is also reported to the program after five years of inactivity.
Be sure to update your beneficiaries after life-changing events such as the death of a spouse, children, divorce, birth of children/grandchildren, or if you have a significant other you are no longer with. Unfortunately, some people forget who was named a beneficiary, and when they pass away, the family discovers that the funds may go to someone who is no longer in their lives.
If you are not sure if you should leave your money to your estate or a specific person, you can specify payout to entities in your last will and testament. An internet search will help you find a local attorney or website that can assist you in making your own will by filling in a template. If you choose to do a last will and testament, you can specify the individuals or organizations who should receive any portion of your estate. You also wouldn’t have to worry about changing your beneficiaries at each financial institution or company each time you have a life-changing event. If you do select a POD/Beneficiary at a financial institution, make sure to keep a copy in a file stored in a fireproof safe or a safe deposit box where your family can locate it in the event of a death.