Common Estate Planning Mistakes To Avoid
When Florida residents execute a will or other estate planning documents, they may think of it as a once-in-a-lifetime process. But it's important to keep those documents up-to-date. A person's life can go through many important changes after a person signs a life insurance policy, will or other estate planning document. It's important to make sure that these documents reflect the changes that have taken place. When they don't, it can lead to serious problems.
One common problem is a failure to change a beneficiary. For example, if a woman names her husband as a beneficiary on a retirement account, but the two later divorce and she remarries, the first husband is typically still her official beneficiary until she updates her account with a new beneficiary. When changing a beneficiary, it's important to change all estate planning documents to reflect the new circumstances.
Often, people neglect to name contingent beneficiaries. A contingent beneficiary is someone who will inherit the asset if the named beneficiary dies first. If the will or other document calls for an asset to go to one person, but that person is not available, then the asset must go through the probate process before it can be distributed, according to Florida's laws of inheritance. This can be time consuming and expensive and it can lead to results that the deceased might not have wanted.
An effective estate plan must take into account the unwelcome possibility that a person's loved ones may die first. The loss of a loved one is a terrible thing to think about, but the consequences of failing to do so can lead to more trouble down the road. Florida residents should periodically check to make sure that their estate plan has been updated to account for the many ways their lives have changed.
Source: Heritage Newspapers, "Six common estate planning mistakes and how to avoid them," Shawn Bumgardner, Oct. 14, 2013 1. On behalf of J. Kelly Kennedy, Attorney/CPA, PLLC posted in Estate Planning on Thursday, October 17, 2013.