When the actor Gary Coleman died on May 28th at the age of 42 after suffering a brain hemorrhage, he left three different wills–including one that was handwritten. Legally, the last will written is the binding document. However, battle lines have been drawn, and it is likely his family and friends are in for a long court fight.
Coleman’s situation underscores the fact that without a well-executed and clearly written will, everything you worked for can go up in smoke. I would add that often overlooked in the estate planning process is the fact that proceeds from life insurance, investments in Individual Retirement Accounts (IRAs), annuities, and qualified retirement plans (such as 401(k)s, 403(b)s, and SEPs), as well as trust property pass outside your will directly to your named beneficiaries.
In fact, the beneficiaries you name for your IRAs and 401(k)s take priority over instructions in your will. That is, a beneficiary you forget naming for your retirement account twenty years ago will inherit those assets even if you later specify in your will that someone else will inherit everything you own. Accordingly, it’s crucial that you review your beneficiary forms on a regular basis.
Other documents that help ensure your wishes are carried out include a Durable Power of Attorney, a document that designates a person to act on your behalf during times of incapacitation, and an Advance Medical Directive, a document that lists your health care treatment preferences and designates a person or persons to make those decisions on your behalf.
Once you have developed and signed these documents, instruct your executor and family members where to find them. And if you are uncertain about your documents, consult your attorney to discuss your need for a will, living trust, durable power of attorney and/or advance medical directive.