It’s easy to avoid making an estate plan, but not having one won’t be easy on your loved ones. Having your affairs in order can greatly help your family, so consider creating a comprehensive estate plan. Unfortunately, there are many easy-to-overlook estate planning mistakes, such as not naming beneficiaries on retirement accounts, not doing so properly, or forgetting to update your estate plan.
Not Naming Beneficiaries
Many people don’t realize that they need to name a beneficiary for retirement accounts and life insurance policies. They may never get around to filling out the forms or assume that these will automatically go to their spouse or children. If you do not name a beneficiary for life insurance or retirement accounts, then the financial company has its own rules about where the assets will go after your passing. Even if you named a beneficiary in your will or trust, you need to name the same beneficiary on your retirement account because beneficiary designations can trump will and trust directives.
Getting Their Names Wrong
This may seem crazy, but it’s more common than you might think. It can be easy to forget to put “Jr.” or “III” after someone’s name. Make sure the name you put down matches that person’s birth certificate exactly or matches their current legal name if that has changed due to marriage, divorce, or any other reason. Not having the names match could result in delays in getting that person their inheritance or even a legal dispute between two people in the family with similar names.[1]
Not Updating Your Estate Plan
There are many reasons why you might need to update your estate plan, including changes in estate law, the tax code, and personal changes. For example, if you’ve designated your daughter as the beneficiary of a life insurance policy and she gets married and changes her name, you may need to update your designation. Similarly, divorces, legal name changes, deaths, and births in the family can mean that you need to revisit your estate plan and update names in any important legal documents.
Not Seeking Professional Advice
Some people think that having an estate plan is only for billionaires, but this isn’t the case. If you have assets you want to pass on to your loved ones, you may need to create a will or a trust and name beneficiaries for certain assets. There are many tax considerations when creating an estate plan, and a professional can help you in that area. These rules are always subject to change, so remember to revisit your estate plan every few years with a professional to see if it needs to change in light of new laws. We can help you create an estate plan that is integrated with your overall retirement plan. Sign up for a time to speak to us about how we can help you get started or help you update your estate plan.
[1] https://www.kiplinger.com/article/retirement/t021-c032-s014-beneficiary-designations-5-big-mistakes-to-avoid.html
Advisory services offered through EGSI Investment Management, Inc., a Registered Investment Advisor with the State of Ohio. Insurance services offered through EGSI Financial, Inc. Guarantees offered with insurance products are based on the claims paying ability of the issuing company. Investing may involve risk and may result in the loss of principal. Ohio Insurance License # 619337. Please contact EGSI Investment Management if there are any changes in your financial situation or investment objectives, or if you wish to impose, add, or modify any reasonable restrictions to the management of your account, EGSI Investment Management Form ADV Part 2A&B is available for your review upon request.
