Three Easy Ways to Screw Up Your Estate Plan

No. 1 – Your Beneficiary Designations don’t Match your Will

Wills are powerful things, but they don’t dispose of everything. Think about if you have life insurance – you probably filled out a beneficiary designation years ago. If something happens to you, the life insurance company is going to send the death benefit to that beneficiary, regardless of what you say in your will.

So, if you’re a parent and you don’t want to leave too much to a child before they’re able to handle it, you might put a trust in your will saying that your estate will be managed for the child’s benefit until they can handle it. But, if the designation on file with the life insurance company says give it to the kid, that’s what the company is going to do.

These days, more and more of our wealth looks like the life insurance. You may own your house jointly with right of survivorship, have a lot of money in a joint checking account, or have named a beneficiary to a retirement or stock account. For these, the survivor may take all regardless of what your will says.

You’d be surprised how many folks who are divorced still have life insurance or a retirement plan naming the ex as the beneficiary. NOT what most want.

No. 2 – You Choose the Wrong Person to Handle Everything

Your plan is only as good as the people you put in charge. It’s so important to choose the right person or institution. You give them too much power not to. If they abuse it, most of your estate can disappear. Instead of enjoying a lasting legacy, your loved ones will be trying to decide whether it’s worth it to go after the person who abused your trust.

No. 3 – You Fail to Plan

Everyone has an estate plan. For most folks, it’s that they don’t plan to die. We all know you don’t get to choose the day and hour. Things happen unexpectedly. Better to go on and make some decisions now to avoid the additional expense and uncertainty for your loved ones.

3 Replies to “Three Easy Ways to Screw Up Your Estate Plan”

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