For some reason, many Florida residents tend to put off their estate planning. It may be an uncomfortable decision for some, or others could be too busy with their lives to bother. For most of us, it’s easier just to say we’ll do it later.
But naming your beneficiaries is a crucial step in proper estate administration. By ignoring or failing to think through these important decisions, you could be making a mistake that would cost your loved ones dearly.
For example, naming beneficiaries for your IRA or 401(k) accounts can be seen as even more important than planning your will. Without the right beneficiary designation, your estate could be tied up in probate for months after your death, and even subject to court fees.
Some people are quick to name beneficiaries for their retirement accounts without thinking about whether the person can make sound decisions on the inheritance. If a loved one who is known for making irresponsible financial decisions suddenly receives a windfall inheritance, what do you think will happen with the money? Instead, savvy people use trusts in their estate and will planning, to guide how the assets are spent by the beneficiaries.
Finally, it’s important to review beneficiaries after any major life events, such as a marriage, divorce, birth, or death of a loved one. Beneficiary decisions that seemed sound years ago may have changed, and might need important revisions to either add an heir to your estate, or to prevent someone from receiving a part of it.
These decisions can be difficult for some to make, and estate planning is often a complicated process. Your estate planning attorney will be able to provide you with solutions, and help you make decisions that will benefit your loved ones after your passing.
Source: The Wall Street Journal, “The life-changing decision that many ignore,” Larry Stein, May 24, 2013