A $500,000 retirement account bypassed heirs due to a 1998 beneficiary form, forcing probate and higher taxes under SECURE Act rules.
A $500,000 IRA was redirected through probate instead of to intended heirs after an outdated 1998 beneficiary form took precedence over a more recent will. Federal rules dictate that beneficiary designations on retirement accounts override wills, regardless of updates or family changes.
The SECURE Act compounds the issue by shortening the distribution window from 10 years to five when an account passes through an estate, increasing tax liabilities by six figures. Rollovers to new custodians often reset beneficiary designations to default estate settings, a pitfall many account holders overlook.
Probate adds court fees, attorney costs, and months of delays, while collapsing tax planning benefits. Attorneys report similar cases annually, typically involving accounts opened in the 1990s with unrevised beneficiary forms.