Preparing your Will?

Is a Will Enough?

If you and your spouse have prepared a will, congratulations, you are well on your way to providing your loved ones a plan of action and future peace of mind in taking care of your affairs. That being said, you may not realize that your will is limited in its scope.

Did you know that some of your assets can still wind up with individuals other than those you outlined in your will? As this recent article makes clear, putting your will in place may not be enough. One big example where could be the case is with your Retirement Assets.

Retirement Assets and Beneficiary Designations

When you first filled out paperwork for retirement accounts, like an IRA, you were asked to designate beneficiaries. What you may not have been aware of is the power of those designations. Those designations will supersede your will. For example, if your will said to leave your assets to your spouse, but your IRA was set up before you were married with someone else as the designated beneficiary, your spouse will not receive those IRA assets  through your will. Assets with beneficiary designations are like substitute wills. 

This situation can be particularly problematic if your retirement assets were not changed following a divorce and your ex-spouse receiving assets from an old beneficiary designation.

Similarly, 401K rules require that your retirement assets go to your current spouse, unless they fill out paperwork relinquishing their claim and designating intended beneficiaries. If your will intends to leave assets to your children rather than a new spouse, your 401K plan may interfere with that intention.

Updating your Beneficiaries

The easiest way to prevent this issue is to simply keep your beneficiaries current on all your assets. This can make sure that your will and assets work together to reach your intended result. Other steps you can take include:

  • Updating your will to reflect the status of your current beneficiary designations
  • Roll over old 401(K) plans to an IRA and execute new beneficiary designations
  • Include primary and secondary beneficiaries.

At Estrada-Legal, PC we believe your family is your most important assets. Contact us at 602 635-7414 to discuss how we can plan for your loved ones.