What to do when a North American account holder dies

Spousal continuance is Settlement Option A on North American's Annuity proof of death claim packet (14497Z). It is available only to the deceased owner's spouse who is the SOLE primary beneficiary of the contract. Electing it makes the surviving spouse the new owner of the contract with all the benefits available under it, instead of taking the death benefit out. The spouse then has to name a new beneficiary on the same form to say who receives the contract proceeds when they die. If the spouse shares the primary beneficiary line with anyone else — a child, a trust — spousal continuance is not available. And the elections on the claimant's statement are a full and final settlement once the proceeds are processed, so this decision is made once.

Not automatically. North American's Annuity Beneficiary change request (8849Z) states the rule plainly: on a jointly owned annuity, death proceeds are payable on the death of the FIRST owner, and they are payable to that owner's primary beneficiary. If the surviving joint owner is not named as the primary beneficiary, the surviving joint owner is not entitled to the proceeds. Joint ownership of an annuity does not behave like joint ownership of a bank account. The fix is to check the beneficiary line, not the title. Separately, if the contract is owner-driven, no death proceeds are payable on the death of the annuitant, so the annuitant needs no beneficiary designation at all.

Beneficiary, not owner. Under IRC Section 72(u), a deferred annuity contract owned by a non-natural person — which includes most trusts — is not treated as an annuity contract for tax purposes, and the earnings are taxed currently rather than deferred. Retitling a fixed index annuity or MYGA into a revocable trust can therefore destroy the tax deferral the contract exists to provide. Name the trust in the beneficiary line instead, using the Annuity Beneficiary change request (8849Z), and attach the Certification of Trust (19306Z) — or the Certification of Charitable Trust (26742Z) if the beneficiary is a charitable trust. Life insurance is the opposite case: a life policy CAN be owned by an irrevocable life insurance trust, and that is what keeps the death benefit out of the taxable estate.

A trust beneficiary on a North American life policy requires a completed Certification of Trust Agreement (L-3172A) with the claim. If the proceeds payable to the trust are $250,000 or more, North American also requires a NOTARIZED Generation-Skipping Transfer Tax Release (O-2797) — an easy step to miss, because it is triggered by the dollar amount, not by the trust type. Both forms are on the life claim forms page at northamericancompany.com/life-claim-forms. If the beneficiary designation names the estate instead (or no beneficiary survives), the executor completes the claimant's statement, files a court certificate of appointment, and must obtain a separate EIN for the estate, because the decedent and the estate are separate taxable entities.