New York families often forget to update their beneficiary designations. If one doesn’t pay attention to this important process, there may be confusion and unintended consequences in the future.
One major mistake is believing that a will is the final disposition of all property. Estate owners should remember that accounts with beneficiaries are handled outside of the probate process. In other words, the beneficiary designation controls and takes precedence over anything that is said in the will. This means that accounts such as life insurance and retirement are handled outside of probate.
Another common mistake that causes future difficulties is when people forget about accounts that they had years ago. In those cases, old designations will still be binding no matter how many years ago they were chosen. When this happens, money could go to unwanted people. Finally, people do not plan for the possibility that a beneficiary could die before them.
To avoid these potential problems, it’s wise to review beneficiaries every few years to make sure that they still match one’s life situation. Estate owners should document all of the choices and changes that they make. Proper estate planning goes beyond just drafting and updating a will. If not, one’s estate plan can fall by the wayside as the assets in their accounts may be distributed not according to their current wishes.
It’s generally wise to retain an estate planning attorney to draft an estate plan. The attorney could make suggestions on how to make a thorough plan that fulfills the client’s intentions. Lawyers often stress that estate planning is all about being organized.