PLEASE NOTE: To protect your safety in response to the threats of COVID-19, we are offering our clients the ability to meet with us in person, via telephone or through video conferencing. Please call our office to discuss your options.

brand
Experienced Attorneys Serving Lee County & Southwest Florida
Estate Administration, Probate, Real Estate, Family Law, Criminal Law & Business Law Attorneys
Schedule a Consultation
239-542-4733 Se Habla Español
Cape Coral's First Law Firm

Keeping retirement accounts outside the probate process

For many Florida residents, their retirement accounts may be some of their most valuable assets. Any funds that are left over in the account after the holder passes on may be distributed as directed to a designated beneficiary. Like life insurance policies and other accounts that transfer outside of probate, this process can allow beneficiaries to receive their funds more quickly, especially useful when dealing with funeral expenses and other significant costs. However, when people do not designate their beneficiaries accurately, retirement accounts may wind up going into the probate process.

Avoiding probate through beneficiary designations

Because probate can be a slow and frustrating process, many people want to transfer as many of their assets as possible outside the courts. IRAs, 401(k)s and 403(b)s all offer beneficiary designations, where the owners can name people to receive the funds after they die. Because these kinds of accounts do not have to go to probate, this may also provide greater protection from creditors. However, there are some problems that can arise when people fail to update their designations or use them carefully.

Concerns to watch out for

In all states, married people must name their spouses as beneficiaries of their retirement account, unless the spouse signs a waiver. Otherwise, the spouse may challenge the distribution. Other problems can arise when beneficiaries are not updated. For example, people might name someone else who predeceased them as a beneficiary or they may have failed to update their account years after a divorce, leaving their former spouse listed.

Retirement accounts may be some of the most easily distributed assets after the owner’s death, especially if the beneficiary process is managed carefully. An estate administration attorney may provide guidance on dealing with life insurance, investment accounts and other funds that may pass outside of probate.