What happens when you pass away with a Will leaving all your property to your spouse, but you never made your spouse the beneficiary of one of your retirement accounts; instead, the beneficiary for that account – designated before you met your spouse – is your sister. Surely, your Will is presumed to express your true intentions, and that retirement account will go to your spouse, right?
The truth is your retirement account, like any other account for which you’ve designated a beneficiary, is not controlled by your Will. These accounts are non-probate assets, and they pass to their designated beneficiaries outside of the probate process, without regard to the terms of your Will. So, in the above scenario, the retirement account might go to your sister instead of your wife, regardless of your true intentions.
Just as you periodically update your Will and your Living Trust, you’ll want to review and update assets and accounts for which you’ve designated a beneficiary. These might include:
- Life insurance policies
- Your 401(k) or IRA
- Your Health Savings Account
- Annuities
- Savings and investment accounts with a Payable on Death designation
It’s also important that you let your estate planning attorney know which accounts you have, and which loved ones you’ve designated as beneficiaries for each. This will help your attorney ensure that your estate plan works the way you want it to, and that there are no nasty surprises for your loved ones after you’re gone.
Stephen A. Mendel, Estate Planning Attorney
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