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Inheritance disputes over beneficiary designations and wills

The last thing that most people want is family members fighting over their estate or assets when they are gone. For this reason, it is important to make sure that your estate plan is set up exactly how you want it. In some cases, such as with an individual retirement account, this might be more complex than it seems. Michigan residents might be interested to learn how inheritance disputes dealing with a difference in will beneficiaries and IRA beneficiary designation is handled.

Anyone who has an IRA should pay attention to the beneficiary designation on the account. This designation serves as an instruction regarding who should get the IRA if something happens to the account holder. What people might not realize is that this designation trumps the information in a will.

For example, if your will says that your IRA should be split between your children, but your IRA beneficiary designation says that your spouse gets the account, your spouse will be the one to walk away with the money. Even if your children challenge the designation, the spouse will still get the funds.

It is important to note that when filling out the beneficiary designation, you can't simply say to distribute in accordance to your will because that won't work. In that case, the IRA beneficiary would be determined in accordance with the state's order of beneficiaries that starts out with a spouse and then children.

It is important to make sure that your beneficiary designations on all accounts reflect your wishes. Those wishes should also be in line with the information in your will. When these two instructions differ, rifts in families can occur as they fight through the probate litigation process.

Source: Bayou Buzz, "Man's paperwork mistake cost his children $400,000 of an IRA inheritance," June 26, 2014

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