Residents of Florida may be aware that various types of assets come with forms that must be filled out to designate to whom the holder wishes the asset to go on the occasion of the holder’s death. What they may not know, however, is that those forms can take precedence over the division of assets that is stated in a person’s last will and testament.
Take, for example, the case of a man who died in 2008, who had intended that the $400,000 that was invested in his individual retirement account be divided amongst his children. His will explicated the division of the asset, and he filled out his beneficiary form for the IRA by stating that the money should be distributed pursuant to his last will and testament. Unfortunately for the man’s children, that expression of intent was not the correct way to complete the form’s disbursement section. Due to that fact, the distribution of the IRA defaulted to the man’s wife, whom he had married only two months prior to his death. Though the children went to court to challenge the distribution, the court ruled against them, as the IRA beneficiary form trumped the will.
Several types of assets can be devised to individuals by operation of law through the completion of beneficiary forms so that the wealth contained therein falls outside of the probate assets, and thus avoids the probate process. These include not only IRAs, but also 401ks and various forms of securities and some bank accounts. As can be seen from the above situation, however, it is imperative that the forms be filled out correctly and be kept up to date; otherwise they can end up thwarting the intentions of the asset holder.
When determining how to go about one’s estate planning, it may be helpful to consider consulting an experienced attorney who practices in the area. Such a professional can not only help determine how best to adequately prepare the estate plan to fulfill one’s desires, but also offer alternatives that one may not have been aware of before.
Source: finance.yahoo.com, “Man’s mistake cost his children $400,000 of an IRA inheritance,” Jeanie Ahn, June 27, 2013