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When undertaking estate planning for the first time, carefully consider each beneficiary you want to include. A beneficiary will receive a portion of your estate. To ensure a smooth transfer of assets after your death, avoid these three common mistakes when designating a beneficiary.

3 Common Beneficiary Mistakes & How to Avoid Them

1. Forgetting to Name a Beneficiary

With some estates, especially those with a sizable number of assets, you can easily overlook certain accounts or holdings and leave them without a specific beneficiary. When this happens, the probate courts must decide who inherits the unaccounted-for asset. Their decision, typically based on next-of-kin succession, may not be what you would have intended.

To avoid this, check that all of your assets and accounts—including real estate, vehicles, valuable or sentimental possessions, and bank, retirement, and life insurance accounts—all have beneficiaries.

2. Not Updating Beneficiaries

estate planningWhen you write up estate planning documents and never revisit them, you run the risk of including or leaving out important people. Upon your death, loved ones may feel hurt or slighted that they haven’t been remembered as part of the estate.

Always revise your beneficiaries after major life events, such as a wedding or divorce, a birth or adoption, or the death of an immediate family member.

3. Leaving Assets to Minors

You can leave assets to minor children, but consider doing so with great care. A child under 18 may not need a sudden windfall, and giving them unfettered access to large sums may result in the money being squandered.

Instead, think about setting up a trust in their name. You can define the terms and rules of the trust; for instance, that they can only access the money when they turn 18, or 21, 30, or any other age. You can also stipulate that the trust pay out installments over time.

 

Keep track of your estate planning documents with the help of the Law Office of George N. Nam. Since 2002, the Aiea-based estate and probate lawyer has represented clients from Honolulu to the Leeward Coast. Call (808) 487-9455 to schedule a consultation, or visit the firm’s website for more information about their services.

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