Thorough estate plans include multiple different kinds of documents, each of which helps achieve a specific goal for the testator. An individual sitting down to create an estate plan will usually discuss their wishes and circumstances with the lawyer facilitating the process.
Those revising their estate plans because of recent significant changes in their lives will often discuss the best way to adjust their estate planning documents to reflect their recent divorce or the addition of a new child to the family. However, estate planning updates frequently create risks.
One of the biggest concerns is the possibility that an individual’s documents will contradict one another. Especially when some of those documents aren’t part of your standard estate plan, you could overlook the need to update certain paperwork when changing your estate plan.
What secondary document do people forget to correct?
Many individuals with successful careers or dependent family members carry significant life insurance coverage. That coverage could help pay their debts when they die or provide wage replacement for their family members.
All too often, individuals updating some of their estate planning documents will forget that they need to address their life insurance paperwork. The beneficiary designation filed with the insurance provider will have more authority than any instructions in a trust or will during probate proceedings.
If there is a conflict between your estate documents and your insurance paperwork, the insurance paperwork will determine who receives the proceeds from your policy. Individuals updating their estate plans and changing who receives their property will typically also need to review their life insurance paperwork to make certain that all of their documents are in agreement.
Careful planning and proper support can make all the difference
It is not easy to generate the necessary income to leave a meaningful legacy or to protect your property when planning your estate so that you don’t lose your major assets to taxes or creditor claims. The average adult hoping to leave something meaningful or valuable for their loved ones or a specific charitable purpose will typically require professional support and frequent reevaluation of their existing plan to ensure that they achieve their legacy goals.
Learning about and avoiding common estate planning mistakes can help those hoping to maximize the impact of what they leave behind when they die.