I think we may have written a post on this a couple of years ago, but I got reminded of the issue a couple of days ago with another sad situation that was relayed to me.
I was talking with one of my CPA friends and he had a client whose husband had just passed away. This was the second marriage for both and there was a substantial life insurance policy on his life. He told his wife that when he passed away, the proceeds would go to her and she would have a very comfortable retirement. Well, as you can probably guess, when he passed away and she went to the life insurance agent who reviewed the policy, they found out that the husband had never changed the beneficiary from the first wife. There is now a substantial chance that all of these proceeds will go to the first wife, not the current wife.
Most farmers assume that all of their assets will pass at their death as per the instructions of their will. However, many assets including life insurance, IRAs, retirement plans, investment accounts in joint tenants, etc. will pass by rule of law which is normally the beneficiary designation in the case of life insurance.
This potential catastrophe could have been very easily fixed by reviewing the life insurance policy on an annual basis to make sure it is properly owned and the proper beneficiaries identified. This wife may never get the funds that both her and her husband thought would be going to her.
On a personal note, I am flying to Chicago today for the Women in Agriculture conference for Top Producer. I will be speaking at two breakout sessions Friday morning and if any of our readers see me wandering the hallways, please stop me and say hi.