Retirement Form Trumps Will or Trust

If you like gambling with cards, don’t carry that over to your designated IRA or Retirement fund beneficiaries. We all know a full house trumps a straight in poker. But did you know this, a Retirement form trumps a Will or Trust? That’s right. If you are considering the designation of your Retirement fund in a Will don’t waste the ink. It won’t work. There are cases in which a divorcee failed to change his or her Retirement fund beneficiary from a now divorced spouse.

Subsequently, that individual, we will call him Sam, indicates in his newly created Trust, that he is leaving his entire estate, including retirement funds, to his two children in equal shares. On Sam’s death, the Custodian of his Retirement funds contacts, Sally, the ex-spouse, and indicates she is the legal beneficiary. Sam’s Successor Trustee claims that Sam, subsequently executed a Trust, leaving his estate including the retirement funds to his children in equal shares.

This could become a case of “Texas Holdem” with the Custodian withholding the funds awaiting a Court order. But usually the Custodian will pay the ex-spouse in accordance with the IRA/Retirement Fund (401K, 403b, etc.) contract which requires payment to the designated beneficiary as a part of the Custodian’s obligation.

Moral of this story is: Treat your beneficiary designation forms as important as your Trust and Will in these matters- REMEMBER, THE RETIREMENT FORM RULES!

Similar Posts

  • Elder Law Issues

    1. Golden Rules of Dementia The NAELA Bulletin reported the five golden rules which lowers the risk of developing dementia and Alzheimer’s disease. The report was based on a study by Analysis by Age UK which revealed that lifestyle was responsible for 76% of changes in the brain and significant avoidance of the disease could…

  • Electronic Wills

    We are in a changing world which also affects Estate Planning. One of the innovations involves electronic Wills which has now been adopted in four states (Arizona, Indiana, Nevada and Florida on July 1st). The Will is created and signed on a digital device such as a computer or tablet. This is a Simple Will,…

  • Natural Death

    The following represents excerpts from the book, Dying to Know by Tani Bahti and my view and comments on the particular issue. The issue of death is difficult for some people to address and plan for, but in Estate Planning, it is a necessity. We must accept the fact that death is a certainty. It is the…

  • NEW Medi-Cal Laws

    Effective January 1, 2017 Medi-Cal Recovery (SB 833) For Medi-Cal recipients who die on or after January 1, 2017, there are significant changes in the law. The most significant impacts the limitations on recovery of funds by the state of California after the death of the Medi-Cal recipient. For Estate Planning purposes, the best news…

  • Perpetuating “Conflict of Interest” by Financial Companies

    As a member of the National Academy of Elder Law Attorneys (NAELA), we were alerted to a new regulatory law being proposed by the Obama Administration. It bears directly on your investments, which are determined by financial advisors for many of us. As an attorney, I must place the interest of my client first. I…