Estate Planning & Probate Specialists

Estate Planning & Probate Specialists

  1. Home
  2.  → 
  3. Estate Planning
  4.  → One estate planning mistake all Texans need to avoid

One estate planning mistake all Texans need to avoid

Texas residents in the process of putting together a will may wish to consider the importance of appropriately filling out the beneficiary paperwork on their insurance policies and various investment and banking accounts. Indeed, many individuals make one fatal estate planning mistake while filling out their individual retirement account (IRA) forms. They either forget to update the beneficiary information, or they fill it out improperly by making a general reference to their last wills and testaments.

This is exactly what happened to an 82-year-old man who succumbed to cancer about six years ago. This man merely wrote a general statement on his IRA beneficiary page, saying that his IRA contents should be doled out as per his will. Unfortunately, IRA accounts and many other banking accounts and insurance policies are not governed by wills.

Instead of having his $400,000 IRA account divided among his children as his will instructed, his entire IRA account went to his widow, to whom he had only been married for two months before he died. Unfortunately, beneficiary paperwork associated with IRA accounts, bank accounts, insurance policies, CDs, mutual funds and stocks will trump anything contained inside one’s will. As a result of this awful mistake, the man’s children have been left unable to inherit the money he wanted them to have.

Fortunately, Texas estate planning professionals know about the pitfalls and mistakes that can occur when planning one’s estate, and they will do everything they can to prevent them. A well-planned estate will not only help to ensure that one’s assets are divided among heirs appropriately, but it will also help protect one’s heirs from losing much of their inheritance to estate taxes. A final — and perhaps the best — benefit of intelligent estate planning is that it can help to minimize the chance that family members and relatives will engage in legal battles over the estate following one’s death.

Source: Yahoo Finance, “Man’s mistake cost his children $400,000 of an IRA inheritance“, Jeanie Ahn, June 27, 2014