Tax revenues are at all-time lows. This includes income taxes, sales taxes and property taxes etc. Local, State and Federal Governments are running huge deficits and several are facing mandatory shut downs. No one will deny that budget cats are needed and I am sure we will see more activity in this area. Unfortunately the easiest way to make budget cuts is to stop new projects and to reduce the size of the government workforce. This increases unemployment and lowers spendable income by the unemployed.
Taxes revenues must be increased and it is difficult to get actual wage increases passed through due to bipartisan politics. This leads to what I call back door tax increases. These include raising taxes on services, estates etc. The concept I want to focus on is escheatment. Escheatment laws deal with the distribution of unclaimed property.
I want to focus on life insurance. When an insured person dies it is the responsibility of the beneficiary to notify the life insurance company and file a claim. In some instances this may take months or years, especially if the beneficiary is unaware of the policy. Also the beneficiary may have predeceased the insured. Most states require that the insurance company pay interest on the death benefits until the claim is filed.
Recently several states have proposed law changes that would require the insurance company to transfer the death benefit to the state if the claim has not been filed within 6 months of death. The insurance companies are obviously concerned as they would now be required to actively monitor each of the people they insure to determine when they are deceased. In addition the beneficiary’s would now be required to file a claim with the state government to obtain the death benefit.
It is so important that you make sure that all of your life insurance policies are kept in safe, fireproof place such as a safety deposit box. In addition a copy of each policy should be stored with your will and other important papers. You must notify your beneficiary and contingent beneficiary and consider giving them a copy of your policy as well.
Keep you beneficiary information up to date. Death, divorce and changes in family circumstances often require beneficiary changes. Times are busy and these decisions are put off till later and never get properly taken care of. My father suffered a stroke that caused brain damage. It was not until he was in critical condition that we discovered his beneficiary was unchanged and remained hi ex-wife. His competence was questionable so we were unable to make any changes and his two dependent children received nothing.
You paid for these insurance policies and is vitally important you take action now to make sure you have the correct beneficiary and contingent beneficiary. In addition make sure several people know where your policies are located and you have plan to have your wishes carried out. This would be a great time to have a full policy review performed by a licensed insurance professional.