There are many potential estate planning mistakes that could make it harder for an estate to distribute assets to beneficiaries. One of the biggest errors occurs when an executor of an estate is not up to the challenge of following the terms of a will, or the trustee of a trust doesn’t pay attention to detail. By not following the terms of a trust or will or by using poor judgement, legal challenges could be made.
It is critical that beneficiary forms are updated regularly when an individual’s circumstances change. If a person were to get divorced, a former spouse could still be listed as a beneficiary on an IRA or 401k and get that money even if a will or trust gives instructions to the contrary. While it may be possible to get a court to abide by the terms of a will or trust, it may be costly and take a lot of time to do so.
As it relates to beneficiaries, it may be a good idea to designate a contingent beneficiary in case anything happens to the primary beneficiary or it is agreed that someone else may better suited to receive an asset. If no secondary beneficiary is named for an asset, family members or others could make a challenge as to who should receive it.
Proper estate planning can alleviate many problems and possibly reduce the potential of a legal challenge related to who gets a particular asset when an individual passes away. An estate planning attorney may be able to help a person create and update wills, trusts or other documents to ensure that the property is ultimately distributed in accordance with the client’s wishes.
Source: Investing Daily, “Key Estate Planning Mistakes You Need to Avoid“, Bob Carlson, July 24, 2014