New Yorkers who create an estate plan are doing so with the interests of their loved ones in mind. This is an act of kindness to ensure that all the issues that need to be settled when a person dies can be done with relative simplicity. However, there are often mistakes that can come up and it is important to recognize them and take the necessary steps to avoid them. One that is frequently overlooked is the beneficiary designations.
Many people have created an estate plan at some point in their lives and simply forgotten about it. For those who have remarried, had children, had relatives who died and more, this can be a problem after they have passed on. Keeping track of life changes goes beyond keeping a scrapbook and taking videos – it includes updating an estate plan regularly. A common example that is seen by experts is a person who got divorced and remarried and did not change the beneficiary designation from the former spouse to the new spouse. In such a case, when the person dies, everything will go to the ex-wife.
Some will ignore the beneficiary designations and fail to update it because they are under the mistaken impression that it will be changed automatically by administrators and custodians. This is especially true with retirement plans. It is unwise to trust others in such an important matter. Making certain the changes are made can save heartache and money later. Changing beneficiaries can be complex, but it is worth it to ensure that those who are supposed to receive the assets get them.
Beneficiaries should be changed at any significant life event when there are people who should be added or removed from the list. Part of having a complete document is making certain that all the people who are meant to be part of the estate plan are listed. For help with this important facet of estate planning or any other issue that arises, having legal help is a must.
Source: cnbc.com, “Out-of-date beneficiary designations are a common and costly mistake,” Mark Henricks, April 17, 2018