Many Nevada residents believe that, by having a will and/or trusts, their assets will be inherited by the individuals they intend. For those assets that would ordinarily pass through probate, that is what will happen. However, there are assets that do not pass through probate, and, if estate planning does not include the verification of beneficiary designations — both old and new — those assets might not end up going to the intended heirs or beneficiaries.
For example, a woman’s husband died with a will and a trust that he believed disposed of all of his assets. This was the second marriage for the couple, and, as the surviving spouse, his widow was to inherit everything. As part of the collection of his assets, an IRA account was located that held approximately $500,000.
When the company holding the account was contacted, it was discovered that the man’s former spouse was listed as the beneficiary on the account. Despite the fact that everyone was in agreement that his second wife should be the beneficiary of the account, the company’s hands were tied. Because she was listed as the beneficiary, the man’s former wife inherited the half-million dollars held in the account.
It is important for Nevada residents to understand that accounts that require a beneficiary designation, such as retirement accounts and life insurance policies, pass to the person designated on the account. This happens regardless of what an individual’s will or a trust might say. Therefore, it is important that, during estate planning, any such accounts are reviewed to ensure the right people will inherit them.
Source: nerdwallet.com, “Avoid This Estate Planning Mistake“, Larry Weiss, May 6, 2016