Estate planning is a complex process that is in some sense unique to each Minnesota resident. A person’s family relationships and charitable choices have can have an enormous impact, and outlining how assets are distributed can be complicated. With so many factors to consider, there are many ways for a will to go wrong, and simply the act of naming beneficiaries has many pitfalls of which to be wary.
According to one commenter, five major mistakes often occur when completing a beneficiary form even though they are relatively easy to avoid. The first is contradiction between beneficiary designations and the benefactor’s will. It should be noted that the former always takes precedence over the latter. Another mistake is naming minors as beneficiaries. Since there are legal limits on how much a minor can inherit, the solution is to place the money in a trust. When a trust is in place, it is essential to name the trust as the beneficiary in a will rather than the individual for whom its assets are reserved.
Simply failing to name beneficiaries is a common error as well, and this is especially true for retirement funds. Forgetting to name secondary beneficiaries in the primary will, or to update the designations after a divorce, marriage or falling-out, are also common mistakes.
An individual on the verge of tackling their beneficiary designations may be able to smooth the process and try to ensure that their intended heirs actually receive the assets by consulting an estate planning attorney. An attorney can often provide valuable advice and assistance during the drafting process of a will and trust documents.
Source: The Motley Fool, “Top 5 Beneficiary-Form Boo-Boos“, Dayana Yochim, November 24, 2014
