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Account benificiary vs will beneficiary....

Posted: Fri Apr 13, 2018 2:14 pm
by Broken Man 1999
My BIL is recently divorced, and his only will was from when he was married. Not the direction he wants now. The divorce is final, no minor children, All marital accounts have been settled, QDRO account proceeds safely in his TIRA.

He is getting things ready to get a new will drawn up, and was wondering about the various accounts he holds.

I told him that the beneficiary of his 401k and IRAs would follow his direction for the accounts. It seems to me from what I have read the account stated beneficiary overrides any beneficiary via a will.

I have questions I would appreciate the forum's wisdom in answering for his situation:

!. Are there any conditions that would have an account (401K, TIRA, and Roth IRA) beneficiary overridden by a will? State is Florida, if it matters. Hopefully my understanding is correct.

2. What other assets can be passed via account beneficiary rather than will, such as taxable brokerage accounts, checking accounts, money market accounts, life insurance, etc.? I believe many of them, if not all, can be passed via TOD selection, but I am unsure.

Other than the financial accounts, his condo and vehicle, and personal property are the only things left, it would seem, if the items identified above can be passed via account beneficiary selections.

Thanks!

Broken Man 1999

Re: Account benificiary vs will beneficiary....

Posted: Fri Apr 13, 2018 3:14 pm
by Silk McCue
Broken Man 1999 wrote:
Fri Apr 13, 2018 2:14 pm
!. Are there any conditions that would have an account (401K, TIRA, and Roth IRA) beneficiary overridden by a will? State is Florida, if it matters. Hopefully my understanding is correct.

I live in Florida and am unaware of anything in a Will that would override these beneficiary designations. People are actually warned that the Will won't take precedence.

2. What other assets can be passed via account beneficiary rather than will, such as taxable brokerage accounts, checking accounts, money market accounts, life insurance, etc.? I believe many of them, if not all, can be passed via TOD selection, but I am unsure.

A taxable brokerage account should support a survivor designation. That can be verified easily. Checking accounts and Money Markets may have different rules depending upon the bank can tell you. I was added to my mothers checking account to avoid any issues when she passes (84 and going strong). Life Insurance clearly has beneficiaries.

Other than the financial accounts, his condo and vehicle, and personal property are the only things left, it would seem, if the items identified above can be passed via account beneficiary selections.

Thanks!

Broken Man 1999
Cheers

Re: Account benificiary vs will beneficiary....

Posted: Fri Apr 13, 2018 3:23 pm
by HueyLD
As to real estate and vehicles, many states allow TOD deed/title. You will need to check the FL state law for such items.

Re: Account benificiary vs will beneficiary....

Posted: Fri Apr 13, 2018 3:25 pm
by FIREchief
In many states, the condo and vehicle can also be passed via beneficiary deed and similar documents.

You may wish to suggest to your BIL that he immediately invalidate the existing will. Better to have no will than one that leaves your assets to somebody you don't wish to receive them. I checked years ago in my state, and there are laws on how to invalidate a will. I believe it is as simple as drawing a line through each page of the will and writing "invalid" or "cancelled" or somthing similar on page one, and then signing and dating. Even if the ex had a copy, the heirs could challenge it. This will cover him and allow time to properly draft a replacement.

Re: Account benificiary vs will beneficiary....

Posted: Fri Apr 13, 2018 3:43 pm
by RickBoglehead
Florida is one of three states that allow Lady Bird deeds (the other are Michigan and Texas), where the property can be left to heirs and avoid probate. Have the lawyer do a new deed, done deal.

Re: Account benificiary vs will beneficiary....

Posted: Fri Apr 13, 2018 3:45 pm
by dm200
To make your will deterine beneficiar(ies), make the beneficiary the estate of xxx

Not that matters such as this might be governed by the final divorce and/or property settlement.

Re: Account benificiary vs will beneficiary....

Posted: Fri Apr 13, 2018 3:58 pm
by Silk McCue
dm200 wrote:
Fri Apr 13, 2018 3:45 pm
To make your will deterine beneficiar(ies), make the beneficiary the estate of xxx

Not that matters such as this might be governed by the final divorce and/or property settlement.
It is definitely much easier and cheaper to change the beneficiaries within the accounts than in the will and it is more expensive and time consuming to do so upon your death.

Cheers

Re: Account benificiary vs will beneficiary....

Posted: Fri Apr 13, 2018 4:08 pm
by vaught
dm200 wrote:
Fri Apr 13, 2018 3:45 pm
To make your will deterine beneficiar(ies), make the beneficiary the estate of xxx

Not that matters such as this might be governed by the final divorce and/or property settlement.
That would make those assets subject to any creditors' claims against the deceased's estate. It would also tie up all of those assets while the estate was handled. Much better to have a POD/TOD and have ownership transfer to the beneficiary immediately.

Re: Account benificiary vs will beneficiary....

Posted: Fri Apr 13, 2018 4:11 pm
by mptfan
Broken Man 1999 wrote:
Fri Apr 13, 2018 2:14 pm
1. Are there any conditions that would have an account (401K, TIRA, and Roth IRA) beneficiary overridden by a will? State is Florida, if it matters.
No.

Re: Account benificiary vs will beneficiary....

Posted: Fri Apr 13, 2018 5:32 pm
by Spirit Rider
RickBoglehead wrote:
Fri Apr 13, 2018 3:43 pm
Florida is one of three states that allow Lady Bird deeds (the other are Michigan and Texas), where the property can be left to heirs and avoid probate. Have the lawyer do a new deed, done deal.
A Lady Bird deed can achieve some of the goals of a beneficiary/TOD deed, but it is much more restrictive. Think of it as more similar to an irrevocable Medicaid trust.

Re: Account benificiary vs will beneficiary....

Posted: Sat Apr 14, 2018 9:36 am
by dm200
mptfan wrote:
Fri Apr 13, 2018 4:11 pm
Broken Man 1999 wrote:
Fri Apr 13, 2018 2:14 pm
1. Are there any conditions that would have an account (401K, TIRA, and Roth IRA) beneficiary overridden by a will? State is Florida, if it matters.
No.
The beneficiary (if a natural person) would need to be living at the time of death of the owner.

Re: Account benificiary vs will beneficiary....

Posted: Sat Apr 14, 2018 10:56 am
by gretah
Read the book "8 Ways to Avoid Probate" published by Nolo press. www.Nolo.com

Many libraries have it.

Read it before writing the new will. It's well-written and a quick read.

Transfer on Death (TOD) and lots of other tools are discussed.

Re: Account benificiary vs will beneficiary....

Posted: Sat Apr 14, 2018 3:13 pm
by FIREchief
dm200 wrote:
Sat Apr 14, 2018 9:36 am
mptfan wrote:
Fri Apr 13, 2018 4:11 pm
Broken Man 1999 wrote:
Fri Apr 13, 2018 2:14 pm
1. Are there any conditions that would have an account (401K, TIRA, and Roth IRA) beneficiary overridden by a will? State is Florida, if it matters.
No.
The beneficiary (if a natural person) would need to be living at the time of death of the owner.
Do you still think this is the case if the IRA beneficiary designation includes a "per stirpes" stipulation?

Re: Account benificiary vs will beneficiary....

Posted: Sat Apr 14, 2018 3:20 pm
by dm200
FIREchief wrote:
Sat Apr 14, 2018 3:13 pm
dm200 wrote:
Sat Apr 14, 2018 9:36 am
mptfan wrote:
Fri Apr 13, 2018 4:11 pm
Broken Man 1999 wrote:
Fri Apr 13, 2018 2:14 pm
1. Are there any conditions that would have an account (401K, TIRA, and Roth IRA) beneficiary overridden by a will? State is Florida, if it matters.
No.
The beneficiary (if a natural person) would need to be living at the time of death of the owner.
Do you still think this is the case if the IRA beneficiary designation includes a "per stirpes" stipulation?
No, but I don't know how common the per stirpes designation is allowed.

Re: Account benificiary vs will beneficiary....

Posted: Sat Apr 14, 2018 3:33 pm
by FIREchief
dm200 wrote:
Sat Apr 14, 2018 3:20 pm
FIREchief wrote:
Sat Apr 14, 2018 3:13 pm
dm200 wrote:
Sat Apr 14, 2018 9:36 am
mptfan wrote:
Fri Apr 13, 2018 4:11 pm
Broken Man 1999 wrote:
Fri Apr 13, 2018 2:14 pm
1. Are there any conditions that would have an account (401K, TIRA, and Roth IRA) beneficiary overridden by a will? State is Florida, if it matters.
No.
The beneficiary (if a natural person) would need to be living at the time of death of the owner.
Do you still think this is the case if the IRA beneficiary designation includes a "per stirpes" stipulation?
No, but I don't know how common the per stirpes designation is allowed.
Fidelity's on line beneficiary system allows it.

Re: Account benificiary vs will beneficiary....

Posted: Sat Apr 14, 2018 3:44 pm
by denovo
HueyLD wrote:
Fri Apr 13, 2018 3:23 pm
As to real estate and vehicles, many states allow TOD deed/title. You will need to check the FL state law for such items.
+1

Re: Account benificiary vs will beneficiary....

Posted: Sat Apr 14, 2018 4:14 pm
by Broken Man 1999
Thanks for all the great information!

I have gone through all his retirement accounts (I have agent access) and there are no issues.

Unfortunately he doesn't have a copy of the will. He went by the lawyer's office Friday and they were no longer at the address, hasn't located the firm yet. The will was drawn up when they adopted a child very early after her birth. She is now is in her late-twenties. Not sure if ex-wife would give him a copy.

At any rate he should be in good shape until he is able to get a simple will completed. Vast bulk of his assets are protected, but, I will emphasize to him that he needs to get things wrapped up with a new will. Better to be 100% than 90%!

I am wondering if the subject of the will came up during the divorce. Seems with all the stories about ex-spouses getting retirement funds via account beneficiaries after thinking new will was sufficient, lawyers would look to see what was what, including wills. But, never having gone thru a divorce, I have no idea what all is discussed. Never want to know, either!

Wife and I grew up together, and are growing old together. This year married 47 years! Wife says she doesn't want to train a new husband, too much work.:happy

Again, thanks for the info!

Broken Man 1999

Re: Account benificiary vs will beneficiary....

Posted: Sat Apr 14, 2018 8:19 pm
by bsteiner
If his Will is 25 years old, it probably no longer reflects his current wishes or current law. He might want to change the executors and the trustees for his daughter. His Will wouldn't have the current provisions for the trust for his daughter that will receive his retirement benefits since the current requirements weren't clear until 2002 (and before 1987 it wasn't clear that you could leave retirement benefits in trust).

In most states, divorce automatically revokes the provisions in the Will for the former spouse.

He should sign a new Will.

Re: Account benificiary vs will beneficiary....

Posted: Sun Apr 15, 2018 4:11 pm
by Broken Man 1999
bsteiner wrote:
Sat Apr 14, 2018 8:19 pm
If his Will is 25 years old, it probably no longer reflects his current wishes or current law. He might want to change the executors and the trustees for his daughter. His Will wouldn't have the current provisions for the trust for his daughter that will receive his retirement benefits since the current requirements weren't clear until 2002 (and before 1987 it wasn't clear that you could leave retirement benefits in trust).

In most states, divorce automatically revokes the provisions in the Will for the former spouse.

He should sign a new Will.
Thank you for the info. He is motivated currently to get a new will, so hopefully he will move forward. I'll be talking to him in a few days to share what I have learned and see where he wants to go with the new options.

Thanks again!

Broken Man 1999

Edited to add: Looks like Florida is a state that revokes the provisions in the will for a former spouse. I'll have to carefully read Florida Statues Section 732.507, but it looks promising.

Broken Man 1999