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The Number One Estate Planning Mistake People Make

Daryll Pomey Orat - Sunday, December 01, 2013

It seems like a simple mistake, but it is one estate planning mistake that many people are guilty of. Failure to update the names of your beneficiaries for all your assets, ranging from life insurance policies to your bank accounts, can be a severe mistake that could actually lead to your assets going into the wrong hands.

Very often, people fail to update names of beneficiaries, especially when there is a major change in their life, like a remarriage. Such failure to update your beneficiary names not just for your bank accounts, life insurance policies and mutual funds, but also for your employer-sponsored retirement plans, annuities, brokerage accounts as well as your college savings plans can have devastating consequences. In the event of your death, your assets could actually go to the wrong people if your beneficiary names are not up-to-date.

For instance, one of the major mistakes that occur is when people fail to update their beneficiaries when they remarry. In such cases, the beneficiary list may contain outdated names like the name of the former spouse. If the list of beneficiaries has not been updated, the assets could actually go to the former spouse. These beneficiaries could actually get access to your assets, even if your will dictates otherwise.

If you designated beneficiaries when first signed on for a life insurance policy, go back and re-evaluate if the beneficiaries are the ones that you have in mind now. A lot can change in a couple of years. People die, divorce, marry again, and life circumstances change. In fact, experts suggest that you periodically review your beneficiary list to make sure that all names are up-to-date, and that they are the ones that you want your assets going to. In fact, it is highly recommended that you also name secondary beneficiaries, who will be in line to receive your assets if the primary beneficiaries die.


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