The days of writing, “The kid gets it all,” are long gone due to the modern complexities involved with inheritance and estate laws. In many cases, the biggest mistakes associated with estate planning can be contributed to a failure to update the plan, including a secondary beneficiary, or being too vague with wording.
Every couple of years, you may want to go through your various investments and make sure that the beneficiaries are up-to-date. There have been many instances where someone was listed as a beneficiary when an IRA, 401k, or annuity was first opened. As life went on, that person left your life for one reason or another (ex-spouse, family disagreement, etc.).
If that beneficiary information is not updated, they may still be entitled to that asset when it’s time to disperse your estate, even if your will says otherwise.
Almost every beneficiary form and estate planning document allows for primary and secondary beneficiaries. This way, if the primary beneficiary passes away before you, your executor knows who to pass the disbursement too. Many people do not think about this. If your primary is your child, who would want to?
For legal purposes, It is a good idea to think about it. A backup, or secondary, beneficiary can prevent headaches for your survivors. Otherwise, that particular disbursement could be settled in the courts and take months or years to settle.
Being vague can be very disastrous as well. Vague could mean generalizing assets or not taking the unexpected into account. It is not in your best interest to keep your will short, simple and trust that your executor will know how to sort things out.
The truth is that your executor only has the power to handout your assets based on what your will states. Otherwise, they have to go to the court for a decision. Your executor does not have any decision-making power. Any unexpected circumstances will have to go to the probate courts to be settled. During that waiting period, those assets could change value.
Working with an estate planner can be the best way to avoid these errors as well as thinking through the many possibilities that could arise. Thinking about and planning for life after one is no longer around is an emotional and stressful process. The help of a professional can help you navigate the difficult, but necessary task, and ensure your end of life wishes are executed properly.
Christopher Jacob is a Registered Representative with Saxony Securities, Inc.. Securities offered through Saxony Securities Inc. (SSI). Member FINRA, SIPC. Non-security products and services or tax services are not offered through SSI. Cadeau is not affiliated with SSI.