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Beneficiary designation mistakes you should avoid

On Behalf of | Aug 3, 2022 | Estate Planning

During the estate planning process, it’s important to include beneficiary designations to ensure that your Florida assets get to the people you wish to have them. However, it’s crucial to avoid making some common mistakes.

Not naming a beneficiary

One of the biggest mistakes you can make with documents like life insurance and retirement accounts is to not name a beneficiary. Whether you don’t realize you can name one or failed to fill out all the necessary forms, this is something you should never overlook. If you pass away without beneficiary designations for your financial accounts, you won’t have any say in what happens to the assets.

Not naming a contingency beneficiary

Naming a contingency beneficiary is important. Unfortunately, some people make the mistake of overlooking this step with their beneficiary designations. If your first-choice beneficiary passes away before you and you don’t have a contingency listed, it means you won’t have anyone to leave your assets to and your financial account will go through probate upon your death.

Not regularly updating your beneficiaries

If you fail to update your beneficiaries when circumstances change, it can work against you. Anything major in life such as marriage, the birth or adoption of a child, divorce or death requires updates to your beneficiaries. Or you might have a falling out with a family member who no longer wishes to inherit anything from you. If you fail to update your documents regularly, it might mean your assets end up with the wrong person. In some cases, that could be disastrous.

Disregarding special circumstances

Certain beneficiaries shouldn’t directly receive assets. Minors and loved ones with special needs either cannot receive assets directly or need them placed into a trust for their benefit, respectively. As a result, it’s important not to make the mistake of leaving assets to some beneficiaries directly.

When you keep these points in mind, your beneficiaries will benefit in the long run.