A. Missing or incorrect beneficiary form is the No.1 IRA mistake people make!
This mistake is so easy to fix or avoid - while the owner is still alive, simply check and correct beneficiary forms. However, once this mistake happens, beneficiaries will be forced to involve tax, legal, and financial advisors to figure out how to distribute the funds when there are no clear instructions and more legal obstacles. This leads to long and expensive legal and family disputes that often don't end well.
Which Areas Are Prone to the Mistake?
There are two areas that are most prone to beneficiary-form problems - divorce and IRA trusts, both of which are usually big-ticket battles.
Will Will Replace IRA Beneficiary Form?
After the IRA owner dies, the IRA beneficiary form overrides the will and the entire IRA goes to the beneficiaries named in the IRA beneficiary form, regardless how is it spelled out in the owner's Will.