Patriarch’s Estate Provides Cautionary Tale about the Importance of Paperwork

By Elsie Dudukovich0 Comments

One of the best things you can do for your loved ones is paperwork.
Most people experience some feelings of discomfort when it comes to end-of-life matters.  Death is something we know happens eventually but we would rather not dwell on the matter.  Therefore, it is an act of kindness and love as well as a practical measure to have our vital paperwork in order. Whether a death comes suddenly or is the natural end for a known cause, having a last will, funeral plans, and other important documents such as property deeds, vehicle titles, and insurance policies created and assembled in an accessible place is immensely helpful to grieving survivors.

Fighting about the handling of money and other assets between grieving loved ones can be enough to leave a legacy of confusion and resentment after one’s passing.  Some people find great benefit in working with a financial advisor and an attorney when it comes to navigating estate matters.  Having a qualified, disinterested, third party providing guidance with an estate can be invaluable during an emotional time.  In addition to making sure you have your important documents, you need to be certain the information contained is correct and complete; a qualified professional can assist with that concern. 

Small details, big consequences
The story of Leonard Smith from 2008 is a sad but powerful cautionary tale attesting to the importance of correct documentation.  As Yahoo! Finance recently reported, Smith knew he was dying of cancer and spent his remaining time taking care of estate preparations.  He wanted to make sure his children received the funds from his IRA and spelled out the distributions in his will.  Unfortunately, he failed to correctly complete the beneficiary information on his IRA and the $400,000 in his IRA went to his wife and not the adult children. 
Even after court proceedings, it was determined his writing “to be distributed pursuant to my last will and testament” on the IRA beneficiary form was not sufficient or valid. A spouse is the default beneficiary if the account owner does not list the names and percentages of distribution for each specific beneficiary.  Writing anything else on the form, as Smith did, invalidated it. 

The purpose of the IRA beneficiary structure is to bypass the probate process for the rest of the estate.  It can be seen as a way for the designated survivors to receive necessary funds while the estate is being processed. 

Other types of accounts follow a similar structure and it is vital the beneficiary sections are complete and correct:
  • Retirement accounts
  • Annuities
  • Bonds
  • Mutual Funds
  • Life Insurance Policies
  • Certificates of Deposit
  • Bank Accounts
It is also important to remember estate planning is an ongoing process.  At least once a year and after a major life event, take a moment to review the beneficiary information for all of your important accounts.  It is also a good time to make sure your will is up to date as well.  If the bank or other institutions holding your accounts changes names or merges make sure your beneficiary information is correct and the institution’s changes did not invalidate your request.  Remember to keep hard copies of all the most recent version of your important paperwork.  Again, it may be in your best interest to seek out guidance from an estate advisor if you have any questions or concerns.