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Man’s Mistake Cost his Children $400k of an IRA Inheritance


Posted on Jul 16, 2014

Leonard Smith passed away in 2008. Before he died, he filled out a beneficiary designation form for his IRA. Unfortunately, he filled out the form incorrectly and the document was deemed invalid. Leonard’s wife, whom he married 2 months before he died, was awarded his $400k IRA instead of his children.

Believe it or not, this is an easy mistake to make and it happens more often than you think. I hope that this article is an eye-opener.  Whenever you are reviewing your estate plan, you must always consider your probate and non-probate assets. We recommend you speak with the administrator of each asset when you are reviewing or determining the beneficiary designations of your non-probate assets.

When you are designating the beneficiary of your non-probate assets, we recommend specifying certain individuals and listing the percentage of how much each individual receives.  The simpler you keep the designations, the better. It’s important that there is no room for any other interpretation than what the document states. For example, think about the 4 corners rule and ask yourself, can you read the document within the 4 corners of the page and know what it means without any ambiguity?

We hope this information will assist you in designating beneficiaries of your non-probate assets so that you can avoid making the same mistake Leonard Smith did.

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