Florida residents who are preparing their last will and testament must keep in mind the importance of reviewing their paperwork on investment accounts and insurance policies — especially when it comes to individual retirement accounts. Indeed, an often-overlooked fact is that if a person fills out his or her IRA beneficiary form incorrectly, it could destroy all of their will planning objectives.
One such disaster happened to a man who died of cancer in 2008. He took care to create a will that would ensure his children inherited what was left of his retirement money, but he made one mistake that was fatal to his plans. Rather than listing his children as beneficiaries on his IRA account, he simply wrote that the IRA should be distributed as per his last will and testament. Tragically, and in contravention to the man’s objectives, the entire $400,000 value of the man’s IRA went to his wife, who married him just two months prior to his death.
This estate planning nightmare can serve as a reminder to Florida residents that accounts that have beneficiary designations — such life insurance policies, bank accounts, CDs, stocks and mutual funds — are governed separately from one’s estate. When an account’s beneficiary designation disagrees with a will, the will and testimony will usually be trumped.
Fortunately, by following specific steps during the will planning process, Florida estate planners can avoid awful calamities like the one that happened to the family above. Estate planning professionals are intimately familiar with these issues, they know what questions to ask, and they know exactly what steps to take to ensure one’s wishes are carried out to the letter upon one’s death.
Source: Yahoo Finance, “Man’s mistake cost his children $400,000 of an IRA inheritance,” June 27, 2014