Retirement account beneficiaries

[monte1022]

We're a bit late in getting our affairs in order. However, our Wills are now written and ready to review. The retirement accounts contain most of our net worth and are all at Fidelity and from what I can tell, they only allow for a primary and secondary beneficiary. Per our choice, spouses are primary and both children secondary.

All four of us travel together on occasion so there is the possibility that all four could die at the same time. Since the retirement accounts bypass the will, how do I make sure that our retirement assets will be distributed according to our wishes should this unlikely scenario happen?

 

[Sunset]

If you all die at the same time, then the retirement account is part of the estate (because nobody can claim the TOD/POD) and should be covered by the Will by default.
Same as if you had a pail of coins in the basement would be covered by the Will.

 

[Montecfo]

Your will should cover that contingency. It is sometimes referred to as a wipeout provision.

In such as case our wills divide our estate net of our identified charitable contributions among our nieces and nephews per stirpes.

 

[monte1022]

That's the problem. Our will gives everything to the kids and no instructions beyond that point. Our lawyer did not included the retirement accounts in the will since they bypass probate. He suggested that I work with our financial institution to assign any additional beneficiaries beyond our children for those retirement assets.


The Will should be in the mail today so I should read it before drawing any conclusions. I gave very specific instructions to the lawyer regarding this possible, but unlikely outcome. Perhaps he did included it somehow. I'm going off of what the paralegal emailed to us and I will update when I have the document in hand. If my instruction are included and the above statements are true then all will be ok.

 

[Stormy Kromer]

I called that the "plane crash" situation with our attorney when we did our wills. We selected our favorite charities in our will, but not as beneficiaries in any of our IRA's or Life Insurance. It goes to our "estate" as residue and the charities get it.

We also specifically excluded all close relatives such as siblings that we didn't want to get anything in case they contest the will.

You're paying an attorney good money, they should be able to answer your questions. Good you're thinking of it now.

 

[Dash man]

It doesn’t seem right. I assume your attorney is not an estate attorney, but more of a general attorney.
You may want to reconsider using this guy.

 

[Montecfo]

Just to further clarify, the retirement accounts do not "bypass" the will if none of the beneficiaries specified is living.

That's what the will is for.

 

[Dash man]

Still, the attorney should have asked questions about your wishes for contingencies and incorporated your desires into the will. The last thing you want is for the state to decide where your accounts go.

 

[RetMD21]

I understand why Fidelity offers only primary and secondary beneficiaries but I don't see why your will would not offer an option beyond your children. IANAA but it seems straightforward to me possibly because I don't know any better

 

[LateToFIRE]

^^^

As some have stated above, I also call this the "plane crash" scenario. For us that would be DW and I perish at the same time. No kids, our estate is the secondary beneficiary on everything, and then from there there, anything outside of trusts is handled by the will in probate.

 

[OldShooter]

We did whatever the attorney told us to do. IIRC each of us have a rev trust that is the other's beneficiary and the wills stipulate that one of us (me, IIRC) shall be assumed to have survived the other in a common disaster.

If your attorney did not ask about things like this, you need a new attorney.

 

[monte1022]

I am starting to believe that we will need an estate attorney to create the desired/required documents. I do not have the final Will in-hand yet, but from the lawyer's responses to my questions thus far, I am not confident.

More on this next week. Thanks to all for your advice and experience.

 

[RetMD21]

I wouldn't count out this attorney but I wouldn't proceed until all your concerns have been resolved. Conceivably it is just a communication issue.

 

[Sunset]

OP - Do your children have children ?

If they do, and the wording for them to inherit your estate includes " per stirpes" then you are fine.

Note: a Will does not need to specify an account as a Will could be valid for 20 years while a person changes banks and brokerages, etc.. All that stuff unless there is a TOD/POD claim on it, becomes part of the estate and the Will divides to the beneficiaries.

 

[skipro33]

OP - Do your children have children ?

If they do, and the wording for them to inherit your estate includes " per stirpes" then you are fine.

My estate planning attorney takes exception to that thought, that things are fine. Many a 'love child' has sprung up upon the death of a child who would have otherwise inherited their parents wealth. The language used in our will is
"the progeny of a lawful marriage" in order to avoid money going to any claims of illegitimacy. Why would this even matter? Because it stalls the process of the division while courts determine if the person truly is an heir or just a fraud. Sometimes they offer to be bought off to drop their claim for a smaller piece of the pie.

Also, my will stipulates that anyone contesting the will is automatically revoked from any inheritance no matter what they may have gotten otherwise. For example, if there were two children, and the money wasn't divided evenly, or one felt the other got something they themselves thought should go to them, say a vacation house, the yacht, etc. and contested the will on that, they would lose any inheritance at all. It encourages the heirs to not complain about what they got over someone else.

 

[Morgan22]

OP - Do your children have children ?

If they do, and the wording for them to inherit your estate includes " per stirpes" then you are fine.

Note: a Will does not need to specify an account as a Will could be valid for 20 years while a person changes banks and brokerages, etc.. All that stuff unless there is a TOD/POD claim on it, becomes part of the estate and the Will divides to the beneficiaries.

You can also do the per stirpes in your beneficiary designations at Fidelity. Spouse is designated as Primary. The 2 kids are designated as 50/50 Contingent, with the Per Stirpes box checked beneath both their names.

Just wanted to let you know that option is there OP.

 

[Montecfo]

My estate planning attorney takes exception to that thought, that things are fine. Many a 'love child' has sprung up upon the death of a child who would have otherwise inherited their parents wealth. The language used in our will is
"the progeny of a lawful marriage" in order to avoid money going to any claims of illegitimacy.

This is a very good point. However, also not clear everyone would want such children disinherited. Definitely requires thought.

 

[rk911]

We're a bit late in getting our affairs in order. However, our Wills are now written and ready to review. The retirement accounts contain most of our net worth and are all at Fidelity and from what I can tell, they only allow for a primary and secondary beneficiary. Per our choice, spouses are primary and both children secondary.

All four of us travel together on occasion so there is the possibility that all four could die at the same time. Since the retirement accounts bypass the will, how do I make sure that our retirement assets will be distributed according to our wishes should this unlikely scenario happen?

Just a quick thought...make the kids primary beneficiares *in the will* and then whomever you want beyond that also in the will. Could be people, could be charities.

 

[street]

My estate planning attorney takes exception to that thought, that things are fine. Many a 'love child' has sprung up upon the death of a child who would have otherwise inherited their parents wealth. The language used in our will is
"the progeny of a lawful marriage" in order to avoid money going to any claims of illegitimacy. Why would this even matter? Because it stalls the process of the division while courts determine if the person truly is an heir or just a fraud. Sometimes they offer to be bought off to drop their claim for a smaller piece of the pie.

Also, my will stipulates that anyone contesting the will is automatically revoked from any inheritance no matter what they may have gotten otherwise. For example, if there were two children, and the money wasn't divided evenly, or one felt the other got something they themselves thought should go to them, say a vacation house, the yacht, etc. and contested the will on that, they would lose any inheritance at all. It encourages the heirs to not complain about what they got over someone else.

That is well covered and thanks for sharing.

 

[monte1022]

At this point in life, neither of our daughters have children. Grand children will probably come at some point in the next five or so years, but until then we want something in place for the worst of outcomes. If all should perish at the same time then we want our joint assets split a certain way and our individually named assets spit a different way between each side of the family. We also don't want dollars going to certain family members.

 

[pb4uski]

This is a very good point. However, also not clear everyone would want such children disinherited. Definitely requires thought.

About 10 years ago my wife's cousin, who was probably in his mid 60s at the time, found out that he had such a love-child from his youth. I don't recall the whole story, but the love-child was welcomed into his father's life with open arms and also welcomed into the family as a whole. The love-child is a good guy.

His dad has a special needs child from much later in life but the love-child is an engineer and financially solid so I doubt has any expectations of a inheritance from his father.

 

[RetMD21]

At this point in life, neither of our daughters have children. Grand children will probably come at some point in the next five or so years, but until then we want something in place for the worst of outcomes. If all should perish at the same time then we want our joint assets split a certain way and our individually named assets spit a different way between each side of the family. We also don't want dollars going to certain family members.

It seems like the will should reflect those references. And Fidelity funds would pass according to the will

 

[monte1022]

We met with the "paralegal" today who was doing our Will work. Wow....she was defensive and combative from the start. She told us that she had been writing wills for 20 years (told us that 3 times) and that she had never seen a will with so many beneficiaries. She reiterated that she could do nothing with the retirement accounts even if all primaries and secondaries were deceased. She also added that "you cannot control things from the grave." I was under the assumption that a Will does control things "from the grave" to a certain extent.

Ours Will desires are simple. If myself, DW, and kids are deceased, then jointly named assets (house, cars, checking, etc) are divided between both sides of the family, assets in my name (401k, IRA) go to my side of the family, and assets in DW's name (401k, IRA)go to her side. That's it! I even provided names and percentages.

I'm slightly high strung while DW is very laid back. DW was strictly an observer today and could not believe what she was witnessing, noting that I kept my cool until it was obvious that we were being treated poorly. I then called out the paralegal's behavior and ended the meeting. Needless to say, we are moving on. It has certainly been a long long long time since I've been blindsided by an aggressive personality without any apparent provocation. Something wasn't right in her life.

 

[Montecfo]

The paralegal's response makes little sense. The fact that she has not seen so many beneficiaries just says she is not covering these wipeout situations in wills she has drafted. That is unfortunate, it is a real issue. It is not included in many "standard" will forms.

And the attitude is completely unacceptable. You are wise to move on.

 

[Dash man]

You need to move on. The paralegal should not be giving you legal advice or opinions. Find a professional Estate Attorney.