A $500,000 Estate Planning Mistake
Mary called after her husband, John had died. She had questions about his will and his 401k. Mary was John’s second wife and he had two daughters from his first marriage. Between his first and second marriages, John had designated his daughters as the beneficiaries of his life insurance and 401k and had changed his will to leave everything to them as well.
After they married, John changed his will to leave some of his assets, including his $500,000 401k, to Mary. The home he and Mary lived in, but which he owned, he left to his daughters, but provided Mary with the legal right to live there. The life insurance he didn’t change. His daughters remained the beneficiaries. So what was the problem?
Mary was told by the 401k custodian that John never changed the beneficiary designation to her. As such, she was told, they must pay John’s daughters, not Mary, despite what the will says. Understandably, Mary didn’t like that answer.
Next week I’ll tell you why.