Protecting your family financially is just as important as protecting them emotionally and physically. This makes estate planning critical. One aspect of estate planning that is often overlooked is the designation of beneficiaries. Many people assume they can either spell out their wishes in their wills or simply leave the problems of divvying up their estates to probate laws and their surviving family members. However, directly designating beneficiaries and keeping your designations up to date could be vital for a smooth estate settlement that safeguards the financial security of your loved ones.
Make Sure Your Beneficiaries Are Current
USA Today warns that it is possible to end up leaving nothing to family members who weren’t included when beneficiary designations were first made. You could even end up giving a former spouse the bulk of your wealth. There are many examples of people designating a beneficiary when they are first hired by a company and neglecting to update their selection for well over a decade despite the many life changes that could occur in that span of time. It is recommended that you consider beneficiary updates for the following life changes:
- A new grandkid is born
- You have a kid
- The inheritance age threshold is reached by a beneficiary
- Someone you designated as beneficiary dies
- Your marital status changes
Avoid Common Beneficiary Mistakes
The Motley Fool points out the importance of recognizing that the provisions of your will are superseded by the beneficiary elections you make. It recommends taking care to avoid some common mistakes when making beneficiary designations, such as the following:
- Limiting the benefit available to minors by designating them directly instead of establishing a trust or naming a financial guardian until they come of age
- Leaving assets and retirement plans to others without obtaining written waivers from your spouse
- Overlooking the need to select backups for your primary designee
- Denying loved ones the tax benefits of your retirement plans by failing to make a beneficiary election
Neglecting to select a beneficiary could hold up vital life insurance funds needed after your death because a probate court would have to decide its distribution. It might be wise to address this with an insurance agent in San Antonio sooner rather than later.
Protect Your Legacy
Lastly, it is crucial that your loved ones know about the plans you have made for your legacy. Make your heirs and any executor who may be involved aware of the locations and content of your will and any forms and documents you may have that detail your wishes concerning the distribution of your estate. The last thing you want is for your family to have to endure the expenses, legalities, and emotional hardships of fighting over what you leave behind.
Do you have a will?
Yes we do for sure. We have seen what happens first hand when things arent kept up to date. Young people often forget, and dont realizif they have children that something needs to be in place right away.