What to do when a MassMutual account holder dies

A life-policy beneficiary change uses the Beneficiary Change Request (FR2265-US), which is for life insurance post-issue only — it is not accepted for annuities, qualified plans, or disability income policies. In section C you select Irrevocable Trust, Revocable Trust, Trust under Insured's Will, Estate of Insured, or Corporation, and give the trust's full legal name, the date it was established, and its EIN. Several MassMutual defaults in the form's disclosures decide what happens when the plan does not go as written. If a revocable trust is the OWNER and the trust is not in effect at the insured's death and there is no living or existing beneficiary, the proceeds are paid to the designated grantors equally, otherwise to the estate of whichever grantor dies last. If you designate a "Trust under the Insured's Will," proceeds are paid only if the will is probated and that testamentary trust is actually in effect. If the estate of the insured or a corporation is the sole primary beneficiary, MassMutual does not let you name a secondary beneficiary at all. And MassMutual states it is only responsible for performing under the policy and is not responsible for carrying out the terms of any trust — it pays the trustee, and the trust's own terms take over from there.

Ownership moves to an irrevocable life insurance trust with the Owner Change Coversheet (FR2255p-LI) and the Individual Owner & Beneficiary Change Request, and MassMutual must already have a Certification of Trust Agreement (F6734, or F6734NY for New York contracts) on file — it will not process a trust ownership change without one, and it does not want the full trust agreement. All trustees named on that certification have to sign, in the form "John Doe, Trustee, ABC Trust dated 01/01/2020." The change is effective on the latest signature date, subject to anything MassMutual paid or did before receiving the form in good order. Three riders are casualties of an ownership change: an Enhanced Surrender Value Rider terminates unless the new owner is a grantor trust established by the owner, a successor from a merger or acquisition, or a non-qualified business trust for the owner's employees; an Annuity Purchase Agreement Rider is cancelled outright; and a policy with the Accelerated Death Benefit for Long Term Care Services Rider can have only one owner and needs form FR2054 when the new owner is not the insured. Every encumbrance — assignments, policy loans, Modified Endowment Contract status — travels to the new owner with the policy. Transferring an existing policy also starts the three-year lookback of IRC Section 2035, which is why a new policy is usually applied for and owned by the ILIT from inception. MassMutual does not draft ILITs and states that neither it nor its agents may give legal or tax advice. Consult a licensed attorney and a tax professional.

MassMutual permits entity ownership of a nonqualified annuity — trust ownership runs through the Entity Owner & Beneficiary Change Request with a Certification of Trust (F6734), not through the life-insurance forms, which expressly exclude annuities. The tax side is the reason most people do not do it: under IRC Section 72(u), a nonqualified deferred annuity held by a non-natural person such as a trust is generally not treated as an annuity contract for income tax purposes, so the inside buildup can lose tax deferral. A limited exception applies where the trust holds the contract as an agent for a natural person. The usual alternative is to leave the annuity individually owned and name the trust as BENEFICIARY, which keeps the deferral and still routes the money into the trust at death. An IRA-funded annuity (including a RetireEase Choice QLAC) is a retirement account and cannot be owned by a trust at all — it passes by beneficiary designation only. Consult a tax professional before retitling an annuity.