Your will isn't good enough
By Brett Anderson
St. Croix Advisors
Even the most updated will — t’s crossed, i’s dotted — may not be enough depending on your intentions and your investments. Many times, without extra steps, some or even a majority of your assets could be distributed against your wishes as outlined in your will.
For example: Your 401(k) plan
If you’re married, regardless of your intentions in your will, generally your 401(k) assets will automatically transfer to your spouse. Regardless of when the account was established (even if it was prior to walking down the aisle and even if you have a pre-nup in place), your spouse becomes the sole beneficiary to your 401(k) assets the minute you’re officially married.
If this is not your intention, you must speak with your advisors, because your spouse must file a written statement waiving rights to the 401(k) assets.
Just as with your 401(k) plan, your IRA assets might not be portioned out as set forth in your will either. Claim would go to the individual(s) you set forth on your beneficiary designation form.
It’s your choice to name whomever you want as beneficiary on your IRA, so make sure that when you are laying out your will and making an estate plan, your beneficiary designations match your intentions.
Once you’re married, you can’t simply roll your 401(k) into an IRA and update the beneficiary designation. Therefore, if you have existing 401(k) assets that you do not want to pass to your spouse upon your death, it’s legal to simply roll the 401(k) assets into an IRA and make sure your beneficiaries are designated according to your wishes prior to your marriage.
You worked hard for your money, so make sure that it passes into the hands you choose, not their attorneys. As always, make sure that you talk to your advisor(s) and attorney(s) as you create your estate plan.