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2 risks of outdated beneficiary information in an estate plan

Posted by Joshua Gunsher, Esq. | Mar 07, 2023 | 0 Comments

There are several parties that testators need to identify by name in their estate planning documents. The executor or representative who will handle estate administration is often selected specifically by the testator, and naming the right person for this role influences someone's final legacy.

Carefully naming beneficiaries is equally important. Most people create estate plans specifically so that they can determine who inherits what property from their estates. They may want to leave certain assets to specific loved ones or even break with standard practices by leaving resources for dear friends or charitable causes instead of just family members.

Unfortunately, minor mistakes with beneficiary designations on someone's estate planning documents could lead to major challenges later during probate. Testators need to frequently review and update their documents or run the risk of one of the two serious issues below arising after they die.

1. A conflict between their estate plan and their accounts

Some assets must be part of a will to pass to the right party, and some assets have their own designations that determine who will receive them when someone dies. It is common for people to address specific valuable resources in their estate plans when they may not need to mention those assets by name because they already have beneficiary designations attached.

They may then have unrealistic ideas of what will happen when they die. Life insurance is a perfect example. There's paperwork filed with the company that determines who receives the proceeds. Transfer-on-death paperwork attached to specific financial accounts can also conflict with estate planning documents. If such designations are not updated, the outcome of probate may be different than what someone intends.

2. An increased risk of a will contest

The likelihood of a beneficiary or family member challenging an estate increases when the documents are significantly out of date. If someone has deceased beneficiaries or a former spouse included in their will, it may be easier for other people to challenge their testamentary documents by claiming they are outdated and inaccurate.

Those who make the effort to create estate plans should also review and update them frequently to ensure that their beneficiary designations remain current. Frequently reviewing and updating beneficiary designations can protect the interests of those who have specific estate planning goals.

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