What A Will Won’t Do

That last will and testament you have tucked away? It may not be the last word on what happens to your stuff after you are gone. Instead, that legal document’s directives for doling out your wealth may be overruled by other paperwork and relevant laws.

A will is a document of last resort to transfer assets. There are a lot of ways to transfer assets that would preempt the terms of a will.

Here are some major assets that often fall outside a will’s scope, along with tips for getting them to the people or organizations you want.

  • Retirement accounts. When it comes to 401(k)s, IRAs and pensions, the person or people listed as beneficiaries may end up receiving those assets regardless of what your will says (though some state laws may sometimes intervene). That’s because you’ve already told your plan administrator or investment firm how to handle your asset after your death. Another problem can arise if no primary beneficiaries are alive, and no contingent beneficiaries are names.
  • Life insurance policies. As is the case with retirement accounts, a life insurance policy’s beneficiary listing, not your will, generally determines who get the money. So again, you could accidently leave a policy payout to your ex. Laws can be tricky here, so the safest strategy is to update beneficiaries on all insurance policies and investments after a divorce.
  • Bank accounts. If an account is titled as transfer on death, payable on death or joint tenancy with right of survivorship, those designations generally override the will.
  • Real estate. If two spouses own a home jointly with right of survivorship, the property automatically passes to the remaining spouse without a court’s involvement.
  • Trusts. Any asset in a trust is not governed by a will, making trusts another tool for distributing assets outside of probate court. But after a trust is set up, you need to retitle accounts, change beneficiaries or take other measures so that each asset you want to put into the trust will actually end up there.

Follow these tips for naming beneficiaries to help asset transfers go more smoothly.

  • Fill out forms completely. When listing beneficiaries, include full names, Social Security numbers and relationships to you. If you have multiple beneficiaries, specify the percentage split of your assets and make sure numbers total 100 percent.
  • Use words precisely. Money goes to a primary beneficiary or beneficiaries. Only if there are no surviving primary beneficiaries do contingent beneficiaries receive funds. Don’t make the mistake of listing one child as primary and another as contingent.
  • Stay current. Life events such as marriage, divorce, birth of a child or the death of a beneficiary are good reasons to review your paperwork.
  • Take care of your estate. Naming it as a beneficiary instead of a person or trust (if you have one) may create unnecessary expense and hassle.
  • Don’t wing it. Have a complicated financial or familial situation? Uncertain about any of the rules? Then work with an attorney. A little money spent up front can save a lot of anger and anguish after you are gone.

Investment Advisory Services offered through Sound Income Strategies, LLC, an SEC Registered Investment Advisory Firm. The Retirement Income Store® , LLC and Sound Income Strategies, LLC are associated entities.

The Financial Effects Of Losing A Spouse

Forced Retirement – Tips To Help You Bounce Back

Staying Healthy As You Age