When people are planning their estate or making out a will, they have to be careful how the planning is done, as survivors have a reputation for fighting over property and assets left behind. If there is only one child or very few people to name as a beneficiary in a will or an estate, there will be few complications in carrying out the details of the will or estate. This article will address what testators should avoid doing when naming beneficiaries of their estates. There are many common mistakes to watch for but here are seven that are commonly made.
Looking at the Importance of Making a Will or Planning an Estate
One of the worst things a person can ever do about his or her estate is to pass on without having an official will or an estate plan in place. This is known as being intestate, in which case the courts may decide who to appoint as heirs and what they will receive, particularly in states like Oklahoma. In fact, a person should consult with a Probate and estate planning lawyer to make certain that everything is placed in proper order for when that time comes. The last will and testament may be the most significant document a person will ever have because it concerns the final disposition of his or her possessions and any debts left behind.
Specific Mistakes to Avoid Making When Naming Beneficiaries
One mistake that people often make about beneficiaries is failing to keep their will or estate updated when changes occur. For example, if a beneficiary should no longer be part of what the testator intended, that change must be noted. Another mistake that can be made is to name the adult child as a co-owner of a deposit or investment account without considering how the other children of the testator will be affected. Quite often, the one who is left in charge of the estate or will do not do what the parent or testator wanted to be done. Another common mistake made is to designate a special-needs individual as an outright beneficiary because the beneficiary could be disqualified by the nature of his or her disability.
More Mistakes That Could Be Made When Naming Beneficiaries
A mistake that testators can make without realizing it is a failure to designate a contingent beneficiary, which may be necessary should something happen to the primary beneficiary. Sometimes, a person will name an estate as the beneficiary for a retirement plan, not recognizing the taxation that will occur through a lump-sum distribution or other means for the beneficiary. Naming a minor as a direct beneficiary may cause complications, and the child will not be able to collect until his or her 18th or 21st birthday, depending upon the law.
A Final Look at Mistakes Made When Designating Beneficiaries
A serious error that a lot of testators make is failing to coordinate their beneficiary designations with the overall estate plan. A failure to do this could result in a beneficiary that the testator intended to receive something not receiving anything if everything has not been aligned with the testator’s estate and financial portfolio. The person who is planning his or her estate will do best to consult with an attorney who practices estate law and has seen great success in practicing that type of law.
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