J. Kelly Kennedy, Attorney/CPA, PLLC

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Attorney and CPA

Family members deprived of father's IRA due to mistake

For people in Polk, one of the most important documents they will complete is their will. When there are assets to be distributed to family members, the best way to avoid a long dispute after the decedent has passed is to create a will that will be followed after death. It's imperative that the will be filled out properly. A mistake for any reason can turn the whole document into disarray and an heir that was slated to receive money or items might be left out.

A man who died of cancer in 2008 made a mistake in his will that deprived his children of $400,000. The money was set to come from his IRA. However, when the beneficiary form for the IRA was completed, he had made an error in failing to list his children by name and the percentages they were set to receive. Since the form wasn't completed properly, it was therefore invalidated. The man's spouse, whom he had married shortly before he died, suddenly became the legal beneficiary.

In order to avoid these kinds of errors, it is advisable for a person to update their wills annually, make sure to fill out the forms completely, keep track of the business doings of the bank that holds the money, retain copies of the forms and to seek legal advice. When it comes to a situation in which a person is preparing the person's will and there are money and assets that need to be considered, having a comprehensive plan can avoid any legal disputes after the decedent has died. Depending on the individual circumstances, there are many options available whether there's a lot of money or a little and if the person is ill or perfectly healthy.

In this instance, the man had intended to leave his IRA to his children, but an error on the form awarded the money to his wife. The mistake could have been avoided had the forms been scrutinized more carefully. Those who have concerns or questions about the proper way to plan for family members should understand their legal options and formalities.

Source: Yahoo Finance, "Man's mistake cost his children $400,000 of an IRA inheritance," Jeanie Ahn, June 27, 2014

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