When creating your estate plan, you need to name specific beneficiaries to inherit your assets. These beneficiaries can inherit from your will, trust, bank accounts, retirement plans, life insurance policies, and other documents. But, when naming your beneficiaries, there are things you need to avoid. If you think that your estate planning is done when you have made a will, think again. Your hard work can be undone in an instant when you open a bank, retirement, or brokerage account. And because beneficiary designations can override your will, you must be carefully coordinated with your overall estate plan. When naming beneficiaries, the following should be avoided:
Not Hiring an Estate Planning Attorney
Even if your estate plan only involves a will and a life insurance policy, it is a great idea to have a lawyer review it. A Litvack Dessureault LLP attorney will review your accounts to make sure they list beneficiaries. Also, they will prepare your accounts and documents properly. Your estate planning attorney will approve your beneficiaries for every account so don’t leave your assets to an ex-spouse or any person you don’t want to inherit them.
Not Being Clear About Your Beneficiaries
When you decide your beneficiaries, you must be as specific as possible. This means describing your beneficiaries by name instead of by group. For instance, you must name the children you want to inherit your assets. If you want stepchildren to inherit, you should name them as beneficiaries in your will or other estate documents. Also, you need to identify the proper person since some relatives may have the same names.
Not Naming Contingent Beneficiaries
These beneficiaries are individuals, charities, or other charities that will inherit only when the main beneficiaries die while your estate goes through probate. Because there is no way you can prepare for every situation, it is a smart decision to name contingent beneficiaries in your will. This way, your assets can be distributed legally if no one can find your primary beneficiary if they refuse to take your assets. This ensures your assets will not go to the wrong people, to those the state designates, or to the state itself.
Naming an Irresponsible Beneficiary
Before you name your beneficiaries, consider if they can manage your assets responsibly by preserving or investing them. If you still want someone to inherit your assets despite their being irresponsible, you may consider leaving it in trust for them. This way, your chosen trustee will distribute the assets a bit at a time.