There are a multitude of mistakes that people make when it comes to putting together their wills. These includes naming of executors and custodians, trying to write their own wills, and not considering items such as liquidity. One of the colossal failures in estate planning I witness when people make their wills is not coordinating the will with the overall beneficiary designations they have chosen.
Most people believe that the written will supersedes their beneficiary designations which is extremely inaccurate. When you name a beneficiary on a life insurance policy, a 401(k) plan, or an IRA, it is essentially a contract of law. This means that you could attempt to write in your will to leave your IRA to your brother, for example, but the beneficiary designation on the IRA says that 100% is supposed to go to your sister. Despite your wishes in the will, the IRA will go to the named beneficiary.
Most beneficiary designation forms today allow for both a primary beneficiary and a contingent beneficiary which should give you ample opportunity to plan out your overall estate. It's important to get a qualified estate plan attorney involved when you draft out your will as different states have different rules and you want to make certain your wishes are carried out in an orderly fashion as quickly as possible.
As life events change for you through trigger moments such as marriage, birth of child, divorce, remarriage, etc., it is incredibly important assess what you have done in terms of will preparation and beneficiary designations. Otherwise, the way you intended to leave your assets at death may not get carried out in fashion you hoped for when you designed your estate plan.
Written by: Ted Jenkin
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