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Avoid This Estate Planning Mistake

Posted by David W. Veliz | Jul 11, 2018 | 0 Comments

Larry Weiss from nerdwallet has enlightened readers on the common, but costly mistakes when it comes to your will and living trust.

You've worked hard throughout your lifetime to provide for your family, save for retirement, and leave a legacy for your children and grandchildren. Now, you're older and it's time to put your estate in order.

The first step is to set up a will and living trust to ensure your assets will benefit your loved ones, so they won't have the grueling process of probate.

Not so fast… Did you check the beneficiaries of your accounts?

The Consequences of NOT Updating Beneficiaries

Many assets have their own beneficiary designations:

  • Retirement plans, 401(k)s, 403(b)'s, pensions, & IRAs
  • Annuities & life insurance plans

Most people don't check these… mistakenly thinking their will or living trust controls their distribution.

The Limits of a Will

Under the law, assets like IRAs are not subject to probate. They pass using the beneficiary designation and aren't controlled by a will. The ONLY time a will controls a non-probate asset is if there's no designated or beneficiary is the estate.

Tidbit: The Supreme Court has ruled that your beneficiary designations on:  

  • Insurance policies
  • IRAs
  • & other retirement accounts will override the beneficiaries of your will in case of differences between the two.

How To Protect Your Beneficiaries

How can we ensure this doesn't happen? UPDATE of beneficiaries should be included in your financial planning checklist:

  1. Review the beneficiaries of your non-probate assets every few years. Life changes &, over time, your beneficiaries might also.
  2. Make sure the beneficiaries of your will and a living trust are still appropriate. These precious documents will help your heirs avoid probate and allow you to establish beneficiaries for assets that don't have specific beneficiary designations.

You worked hard. Keep your hard work up to date so you can leave a legacy for your family. To learn more about avoiding costly mistakes that could hurt your assets contact David Veliz at Veliz Katz Law. Read the full article by Larry Weiss, CFP & CPA at nerdwallet.

About the Author

David W. Veliz

David is the managing partner of Veliz Katz Law centrally located in downtown Orlando, Florida. He has been providing a broad range of legal services to clients in the Central Florida area for over 29 years. David is a Florida native, having grown up in the Orlando area and is a graduate of Winter Park Hi...

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