We often remind people to make sure their estate plans are up-to-date. While a major life event will usually prompt a review of will and trust documents, what people sometimes forget is to check the designated beneficiaries of life insurance policies and retirement funds.
There is more to keeping these current, though, than just making sure the right person is listed. To ensure that the funds are disbursed quickly -- and without any additional taxes or administrative fees -- it is also important to keep up-to-date contact information for each beneficiary with estate plan documents.
Yes, Michigan requires change of beneficiary forms to request the name (or class, e.g. "children"), address and beneficiary's relationship to the insured. It is all too easy for there to be a lag in updating the information after a beneficiary moves or changes his or her name. Keeping current information in one place will make everything run more smoothly.
There are situations when an insurance company is notified of the insured's death but cannot locate the beneficiary. The company will wait four months for the beneficiary to step forward. After that, Michigan law requires the company to take "reasonable steps" to pay the funds to the beneficiary. Those steps may include sending written notice to the beneficiary's last known address.
If the insurance company cannot locate the beneficiary, it will hold on to the money for three years. At the end of that period, the company will turn the funds over to the Michigan State Treasurer. The treasurer's website makes it clear that the state does not take ownership of the funds. Rather, the state serves as custodian. Under current law, the state will hold the funds indefinitely, releasing money only to the rightful beneficiary.
Unfortunately, the rest is up to the beneficiary. The state maintains a database with all the necessary information, but the state will not continue to search for the beneficiary or heir.
Source: Michigan Compiled Laws Annotated, Ch. 567 Uniform Unclaimed Property Act, current as of March 2, 2016