Beginning to establish your estate plan can feel overwhelming. But taking it one step at a time helps, and soon you will have a complete plan that will help you as you get older and pass your assets to others when you’re gone. There are lots of parts to make the estate plan run smoothly. One constantly changing aspect of your estate plan is your beneficiaries. Uncoordinated beneficiaries can cause trouble, time and money for your loved ones after you pass away.
When writing your will, you are asked to list all assets, such as your house, car and even old record collection. Then you are asked to name a beneficiary for each asset. We understand that.
In your will, you cannot include your 401(k) account, IRA, or life insurance. This is because you had already named beneficiaries when you established these accounts. Many DIY wills fail to mention this.
Uncoordinated beneficiaries happen when you do not have the same beneficiaries listed for the same assets in all instances. Let’s say your beneficiary on your life insurance states one name, and your will says to give your life insurance to someone else – not only can you NOT do this, but you also have uncoordinated beneficiaries.
Another instance is updating your will after your divorce and leaving your house to your children instead of your ex. But if you forget to update your retirement and insurance beneficiaries, you may still leave a large sum of money to your ex-spouse instead of your children. In fact, it’s wise to review and update your beneficiaries and entire estate plan every 3-5 years.
Tensions are high when a loved one passes away. People may feel left out if the beneficiaries are not listed correctly. Having uncoordinated heirs will cost your loved one’s time and money and cause arguments.
Named beneficiaries on accounts will always supersede your will.
If you update your will and ask to leave your life insurance money to your best friend, it will not happen unless that person is named on the life insurance forms – even if it’s what you want and specifically state it in your will. This is why working with an experienced estate planning attorney is important. They can help you review everything in your estate plan and ensure it all works together and is not in conflict.
Call us for more information on setting up an estate plan that works. Contact one of our lawyers today and schedule an appointment at 630-864-5835. We will review all aspects of your plan and ensure all listed beneficiaries work together.
AREAS WE SERVE: DuPage, Kane, Lake and Will counties.