What to do when a Farm Bureau Financial account holder dies

Yes. Policy ownership can be transferred to a trust, most commonly an irrevocable life insurance trust (ILIT), by completing an Assignment of Policy form. Contact your Farm Bureau agent to request the form. Both the current owner and the new owner (trustee) must sign the assignment. Transferring an existing policy to an ILIT triggers a three-year lookback period under IRC Section 2035; if the insured dies within three years, the death benefit is included in the taxable estate.

Beneficiaries can choose from several settlement options: a lump sum payment (the default), installment payments over a fixed period between five and 50 years, or a guaranteed income stream for life through an annuity payout. The lump sum option provides the entire death benefit in one payment, while installments and annuity payouts distribute proceeds with accumulated interest over time.

Yes. Item 4 of Farm Bureau's Beneficiary Designation form (433-64) is a dedicated "Living Trust" option. Name the trustee(s) and any successor trustee(s), the grantor(s), the trust name, and the trust date, then send a copy of the first page following the cover page and the signature page of the trust document with the form. The form requires the policy Owner's signature; no witness is required. One Farm Bureau-specific catch: if evidence of the trust's qualifications is not furnished to the Company within 365 days of the Insured's death (or the trust has terminated), the proceeds are paid to the Insured's estate instead. Submit the form to your Farm Bureau agent or mail it to Farm Bureau Life Insurance Company, 5400 University Avenue, West Des Moines, IA 50266-5997.

Life insurance death benefits paid to a named beneficiary are generally received income tax-free under IRC Section 101(a). If the death benefit is paid in installments or as an annuity payout, any interest credited to the unpaid balance is taxable to the beneficiary in the year it is received. Death benefits paid into a deceased policyholder's estate may be subject to estate tax, which is one reason policyholders use an irrevocable life insurance trust (ILIT) to remove the death benefit from the taxable estate.