Costly mistake

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Before Leonard Smith lost his battle with cancer in 2008, he worked with his financial advisors and attorneys to make sure his children received the balance of his retirement funds when he died.

A single mistake, however, thwarted his well-laid plans. Family members realized a year after he died that his IRA beneficiary form was filled out incorrectly. Instead of specifically listing the names of his children along with the percentages designated to each heir, Smith wrote: “To be distributed pursuant to my last will and testament,” where the disbursement of funds was spelled out.

But Smith’s failure to complete the form correctly invalidated the document, making his surviving spouse the beneficiary by default.

“I had no idea that a will could be trumped by an IRA beneficiary form,” Deborah Smith-Marez, 50, Leonard’s daughter, told Yahoo Finance.

Smith-Marez and her siblings fought in court to recover the money, but the court awarded the $400,000 in the IRA to their father’s wife, who married Smith two months before he died.

Like Smith-Marez, many Americans are unaware that long-forgotten beneficiary forms can override wills and undermine their loved ones' intentions.

Quote: theodores

That's all I do at work all day is due diligence. We have to run title on these parcels three times: once when we acquire the lease, before we drill, and after we drill. It's unbelievable -- the amount of money at stake is mind-boggling.

Quote: odiousgambit

this business of a second wife coming in late into the deal marrying some doddering old fool and getting everything is a very common story.