Free Employee Death Benefits Letter

Many decedents are entitled to benefits from their current or prior employers under pension or profit-sharing plans or under group life insurance policies. In fact, for most individuals, the greater part of their wealth is evidenced by benefits payable under employee benefit plans.

Employee benefits payable to a named beneficiary generally pass outside of the deceased employee's probate estate, unless the estate itself is designated as the beneficiary. In order for the beneficiary to collect the benefits, it is generally sufficient to merely advise the plan administrator of the employee's death. In some cases, proof of death, usually a death certificate, is required.

If the majority of the decedent's assets were in pension and profit-sharing plans or life insurance and joint tenancy assets (with survivorship rights), it may be possible to completely avoid the probate process. Consult a lawyer to ensure that appropriate title transfers are completed. However, compensation plans, private annuity contracts and deferred compensation agreements are typically includable in the decedent's gross estate for death tax purposes. Thus, it may be necessary to file death tax returns even if the assets are not subject to probate. A lawyer should be consulted about the necessity of filing death tax returns.

Many employers offer group life insurance for their employees. Some plans provide term life insurance for the financial protection of the employee's spouse, children or other beneficiary upon the employee's death. Typically, the employer provides coverage of one, or one and one-half, times the employee's salary. The employee may have also had the option of purchasing additional insurance through the group insurance company. There may also be investment aspects to the group life insurance policy. A survivor should ask about the existence or applicability of accidental death and dismemberment benefits.

Form 712 is an Internal Revenue Service document which describes to whom the proceeds of a life insurance policy are paid and the amount paid. This information is generally required in connection with the valuation of the estate and for tax returns required to be filed by the personal representative.

There are a wide variety of deferred compensation plans available to employees today, ranging from standard pension plans, to profit-sharing and 401(k) plans. It is important for the decedent's personal representative or beneficiary to gather the necessary information about the decedent's benefit plans in order to recover the benefits to which he or she is entitled. Often the names of the plans are used interchangeably, so it may be difficult to determine the exact type of a particular plan.

Pension plans must meet certain conditions in order to be a "qualified plan" under the rules of the Internal Revenue Service. Pension plans go by many names. Straightforward pension plans are generally one of two types, either a "defined contribution plan" or a "defined benefit plan." In a defined contribution plan, the employer contributes a predetermined amount to the plan each month. The employee's benefit amount is a reflection of the employer's total contributions, and the earnings on those contributions, as of the time the employee retires. A defined benefit plan, on the other hand, provides the employee with a fixed amount of benefits at retirement, regardless of the amount of contributions from the employer. The employee must satisfy a minimum length of service with the company. Often, the plan allows the employee to choose to receive a lump sum at retirement or monthly payments for life.

As defined in the Internal Revenue Code, 401(k) plans involve contributions from the employee as well as the employer. The employer usually matches a certain percentage of the employee's contribution. For example, the employer's contribution could be anywhere within a few cents for each dollar invested by the employee up to 100% of the employee's contribution. Again, there are typically several optional methods for receiving the benefits, including lump sum, periodic payments, or some combination of the two.

A profit-sharing plan is simply a plan for sharing company profits with the company's employees. These plans are defined in Section 401(a) of the Internal Revenue Code. The amount of the employer's contributions to the plan depends on the financial success of the company each year. As a result, the employer contribution can vary from nothing at all in a poor financial year, to a substantial amount in a very profitable year.

1. Sign the letter.

2. Keep a copy of the letter for your records.

3. Photocopies, rather than original copies, of any relevant documents should be included with the letter. You should keep a copy of all correspondence to and from the company and maintain a written summary of all telephone conversations.