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Estate Planning & Probate Specialists

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Texas estate planning and retirement account beneficiaries

Texas residents must consider all relevant factors during the construction of their estate plan. Wills and estate plans are best served when drafted in a way to ensure that one’s beneficiaries receive what was intended. A recently deceased telemarketing executive stated in his will that his three children would divide his entire estate. What this man did not know is that the money in his 401(k), which represented a large portion of his estate, was not governed by his will under the law.

What many individuals do not realize is that when they open their 401(k) account with their employer, they indicate in the paperwork who the beneficiaries of that account would be. Those who fail to keep their 401(k) beneficiary information up to date may not be leaving their money to the person they currently wish to receive it. Because the telemarketing executive in this case did not designate his children as beneficiaries on his 401(k), his wife will be set to inherit the funds, even though he married her just two months prior to his death.

Two law professors at the Cardozo School of Law have dubbed retirement accounts to be substitute wills. Many Americans simply do not know that their 401(k) retirement accounts will not be divided by the instructions laid out in their will and testimonies. Rather, it will be distributed according to the beneficiary-designation form associated with the account, a document that may have been lost or completely forgotten about. Indeed, perhaps one of the worst mistakes may be to leave an ex-spouse listed as beneficiary on a 401(k).

There are other considerations that Texas residents must be careful not to overlook when considering their estate planning options. Fortunately, professional assistance is available to anyone who wishes to cross all their T’s and dot all their I’s when it comes to making sure their beneficiaries get what they intend them to receive. Indeed, no amount of planning is too much or too soon regarding one’s legacy and estate.

Source: The Wall Street Journal, “When Your 401(k) Has a Bad Heir Day“, Jason Zweig, April 4, 2014