By Elizabeth McKinney, Attorney
English, Lucas, Priest and Owsley, LLP
Many people believe that if you have a will, that document controls who receives every asset you own. But that’s not necessarily true. A will or other similar documents, such a trust, can dictate who gets most assets, but beneficiary designations for certain assets, such as 401(k)s and life insurance, as well as transfer on death or payable on death designations on bank or brokerage accounts, supersede that. Those accounts should be reviewed periodically, but particularly after a major life change such as a death or a divorce.
For example, if you change your will to indicate your new spouse should receive your assets after your death, as you probably should, but you didn’t change the beneficiary for your Individual Retirement Account (IRA), your ex could end up with the proceeds of that account, much to the surprise of your new spouse. Most people set up those accounts and never revisit the information attached to it, which is where problems come in.
The other problem that could arise is that your ex and your current spouse could end up in a protracted legal battle over your assets if your will and the information attached to your account are in conflict. Your widow or widower will spend down the remaining assets in court trying to straighten out an avoidable mess.
Here’s a short list of the types of accounts you need to check on a regular basis. Every January, or any time you’ve had a major life change, is a good time to go through these accounts.
- All retirement accounts from every job you’ve ever had. If you haven’t rolled those into one account, you’ll need to check the beneficiary for each one.
- All Individual Retirement Accounts. If you’ve ever started an IRA, or rolled up old 401(k)s into an IRA, you’ll need to check those beneficiaries, too.
- All bank accounts. Checking, savings, retirement, Christmas Club, business accounts, credit union – all of it. Check the beneficiary on each account, and also check to see who is listed as having access to the account.
Handling these seemingly small details is crucial to easily settling your estate and keeping your family out of court. It’s a gift you can give your family that will pay off for years to come.
If you have questions about estate planning, wills or probate, please contact me, Beth McKinney, at firstname.lastname@example.org or (270) 781-6500. Our firm, English, Lucas, Priest and Owsley, works with families on estate planning often and will be glad to help you.
Other related posts:
Moving South doesn’t mean you escape higher estate taxes, August 15, 2015
Same Sex Marriage and tax law, July 21, 2015