Who gets your assets when you’re gone?
I want to tell you a story about how a woman’s simple negligence cost her kids nearly $500,000. After 30 years of marriage, a woman I will call Mary Smith found herself in a failing marriage that was heading for divorce court.
Her only major financial asset was a rollover IRA that had started as a 401(k) account shortly after she graduated from college and started a career in sales. As she advanced, she was able to put more and more money into the account; by the time of her impending divorce, her IRA was worth about $500,000.
As she contemplated her divorce, she was fairly confident that she’d walk away with at least her IRA. Her two children, Sarah and James, had recently graduated from medical school; each of them had substantial student loans. Mary told them she would help with the loans by using some of her IRA to pay down their loan balances at the rate of $12,000 per year for each of them. She made good on her promise by making the first payment.
Then tragedy struck. Early in the divorce proceedings, she was killed in an automobile accident. Mary’s lawyer had given her a list of documents to bring to their second meeting, including beneficiary designations for her IRA. But she never made it to that second meeting. (more…)
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