Many people assume their will or living trust controls everything they own. But retirement accounts like IRAs and 401(k)s, along with life insurance, usually pass directly to whoever is named on the beneficiary form, regardless of what your will says.
That creates a few common and costly mistakes: an ex-spouse still listed as beneficiary, no contingent beneficiary named, or a minor named directly with no structure to manage the money. Any of these can send assets to the wrong person or into a court process.
The rules for inherited IRAs have also tightened. Under the SECURE Act, many non-spouse beneficiaries must now withdraw the entire inherited account within ten years, which can carry significant tax consequences if it is not planned for.
A good plan coordinates your beneficiary designations with your trust and your overall goals, so the right people inherit in the right way. We review these as part of every estate plan.
This article is general information, not legal advice, and does not create an attorney-client relationship. Estate and business law change and depend on your specific situation. Speak with Donald W. Flaig before acting.