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Those who have actually created an estate plan are moving in the right direction as far as protecting their assets for their heirs. However, just because a person has a plan in place does not mean that he or she no longer has to worry about estate planning. Since the circumstances of people’s lives are constantly changing, it is important that Florida residents update their estate plans accordingly. One of the most common mistakes people do is to neglect to update their beneficiaries.
Due to life changes people’s intended beneficiaries may end up changing. This is common for those who marry, remarry or divorce after they have created their estate plan. If one does not reflect the change in intended beneficiaries on pertinent legal documents and financial accounts, a person runs the risk of assets being distributed to unintended people. For example, failing to change the beneficiaries on a will after divorce may cause one’s assets to go to a former spouse on accident.
Some of the documents and accounts of an estate plan which are important to maintain up-to-date beneficiaries are IRAs, mutual funds, life insurance policies, bank accounts, employer-sponsored retirement plans, annuities and 529 college savings plans. One should review designations for beneficiaries on a periodic basis. Many financial experts suggest people also specify contingent and secondary beneficiaries. This will help protect assets in the case that a primary beneficiary dies while a testator is still alive.
However, when updating intended beneficiaries on estate planning documents and accounts, it is important to follow the correct legal procedures. It is also essential to correctly change the legal language on documents to sufficiently protect assets. Even a small mistake can cause a will or some other estate planning document to be challenged in probate court in Florida or any other state.