The Most Common Mistakes People Make When Naming Beneficiaries
The estate planning process is critical for safeguarding your future and that of your heirs. As you go through the process, it is important to be thorough and thoughtful so you can create a plan that clearly outlines your wishes and is protected from potential challenges of its validity.
Part of this is being careful with naming your beneficiaries. Here are a few examples of some of the most common beneficiary-related mistakes people make when developing their estate plans.
- Failure to Execute Beneficiary Designations: Make sure you designate beneficiaries for every asset that provides a beneficiary designation, such as your retirement accounts, bank accounts and insurance policies. The failure to name a proper beneficiary on an account may result in the account becoming an estate asset, thus requiring a probate administration.
- Failure to Designate Contingent Beneficiaries: Contingent beneficiaries act as a backup in the event your primary beneficiary predeceases you. Not having a contingent beneficiary in the absence of a primary beneficiary is essentially the same as not having a beneficiary at all. If you forget to update your beneficiary designation after a primary beneficiary dies and no contingent beneficiary is designated, then upon your death, the asset would then be subject to probate.
- Failure to Review Beneficiary Designations: Valid beneficiary designations override devises in your will. You may need to update your beneficiary designations based on life changes, such as marriage, divorce, new children or death of a beneficiary.
- Failure to be Specific: Use specific names with your beneficiary designations rather than simply saying “my son” or “my partner.” In doing so there can be no confusion about your intent.
For more tips about naming beneficiaries in your estate plan, contact a trusted Florida estate planning attorney at BaumannKangas Estate Law.