IRAs, 401(k)s and retirement plan benefits are frequently the most valuable assets we own. A common assumption is that signing a will takes care of these items. It doesn’t.
A will does not affect items passing by beneficiary designations, such as your IRA or 401(k) accounts. (Nor does a will affect most joint accounts, jointly owned real property, annuities and anything having a transfer-on-death beneficiary.) Thus, your IRA will pass to the persons named on your beneficiary designation even if your will states otherwise. Some would say that the beneficiary designation “trumps” the will. Only if “my estate” is the designated beneficiary does a will control the disposition of an IRA.
The will / beneficiary designation conflict is especially graphic in a second marriage situation. The decedent’s children are relieved when they confirm that the decedent’s will leaves everything to them, as was promised. But it will be hard to overstate their disappointment if the surviving spouse stepparent is the designated IRA beneficiary.
Thus, drafting a will is only the first step in completing an estate plan. Always, always, always, coordinate the beneficiary designations with the will.