Post Retirement Death Benefit Agreement

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Post Retirement Death Benefit Agreement

When a person retires, they are entitled to a pension if they have been contributing to it. In such a case, the person should have a post retirement death benefit agreement in place. The agreement ensures that their beneficiary continues to receive the pension after they die.

In simpler terms, your beneficiaries will get the remaining pension payments due to you as post retirement death benefit without the hassle of going through a probate court as it can be extremely expensive.

When Do You Need Post Retirement Death Benefit Agreement?

If you have a spouse, partner, or children under the age of 18, it is advisable to draft an agreement. This way, you can stay assured knowing that should anything happen to you; your loved ones will have financial support and stability. So, if you have not thought of a pension beneficiary, you should immediately consult a qualified attorney who can help you draft an agreement.

Purpose of Post Retirement Death Benefit Agreement

The agreement ensures your beneficiaries, like your spouse, minor children, or partner, continue getting your pension after your demise. Your will cannot be used to make a person a beneficiary of your pension plan, as you have to name a beneficiary in the forms provided by the account administer. A post retirement benefit agreement is binding and it supersedes a death benefit nomination.

Inclusions in Post Retirement Death Benefit

Some of the vital information that should be included when drafting this agreement is as follows:

  • Names of the beneficiaries
  • Social security numbers of the beneficiaries
  • Name and social security number of the retired individual
  • Relationship between the retired person and the beneficiaries
  • Age of the beneficiaries
  • Address of the beneficiaries
  • Pension plan details
  • Witnesses who sign the agreement.

Usually, you require witnesses when signing a non-lapsing agreement. The witness can be anyone other than the beneficiary and is a preventive measure against fraudulent claims.

How to Draft Post Retirement Death Benefit Agreement?

The procedure for drafting a post retirement death benefit agreement is as follows:

  • Get in touch with your organization or attorney to create an agreement
  • List down the pension account details along with the name and contact details of  the managing organization or the financial institution and the account manager
  • Mention the amount of pension along with the date of superannuation
  • It should also include your Social Security number and bank details where the pension is being credited
  • Mention the name and other particulars of the pension beneficiary
  • Sign the document in the presence of witnesses
  • The agreement becomes a binding agreement once signed by you and attested by witnesses

Pros and Cons of Post Retirement Death Benefits Agreement

Here are the advantages of having an agreement for post retirement death benefit:

  • If you have earned a pension, it gives you peace of mind knowing your spouse and minor children will have much-needed financial support when you are not there
  • The agreement does away with uncertainty regarding who should get the pension beneficiary payout
  • There is no need for probate as the agreement is executed immediately on the demise of the retired individual

Some of the disadvantages of having the agreement are as follows:

  • In some pension plans, you cannot change the pension beneficiary once you get your first pension payout
  • The rights of your domestic partner supersede the rights of minor children

Types of Post Retirement Death Benefit Agreement

Some of the different types of agreement for post retirement death benefit are as follows:

  • The most common type of agreement is the one that an employee signs with their organization before they are superannuated
  • A retired individual can also create an agreement with their lawyer for their other pension accounts, like 401(K), self-managed superannuation fund, IRAs, and Keogh plan

Key Terms of Post Retirement Death Benefit Agreement

  • If a pensioner dies after the pension commences, the pension beneficiary payout distribution will occur with respect to the portion in their account balance, subject to the rules in the subsection
  • If an employee dies after their retirement date, the employee’s estate or designated beneficiary shall be entitled to receive the remainder of the unpaid portion of the retirement benefit.
  • The post retirement death benefit shall be paid on the same basis as it was paid to the employee on the retirement date.
  • The organization may, in its discretion, accelerate payments due to the pension beneficiary

What Happens in Case of Violation?

In case you violate the agreement, it could result in loss of pension for your beneficiaries. Also, the named beneficiaries may take legal action against one another after your demise, during which your beneficiaries will not getting access to the pension beneficiary payout until the court decides the outcome of the case.

[Also Read: Retirement Plan Agreement]

Sample Post Retirement Death Benefit Agreement

If you want to ensure your spouse and children are financially secure after your death, consider a post retirement death benefit agreement.

Download Post Retirement Death Benefit Agreement Template

Post Retirement Death Benefit Agreement

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