Mistakes to Avoid When Naming Beneficiaries

When planning your estate, there are a number of different legal tools you can use. Many people first think of wills, trusts, and powers of attorney. However, beneficiary designations are also a big component of estate plans. Whether you are naming beneficiaries in your will, in a trust, or designating them on financial accounts, your beneficiaries make up a big part of your estate plan and truthfully, they are likely the reason you are creating a plan at all.

However, naming beneficiaries is not as straightforward as it may seem at first. Making a mistake with these designations can result in your wishes not being respected and your family members not being protected. Below, our Utah estate planning lawyer outlines some of the most common mistakes to avoid when naming your beneficiaries.

Not Designating Beneficiaries

Of course, the biggest mistake you could make with beneficiaries is failing to designate them at all. Of course, people do not mean to make this mistake, but it is usually a result of overlooking certain accounts that allow for beneficiary designations. To avoid this mistake, create a full inventory of all of your assets to make sure none get missed. If you are unsure whether a certain account allows for a beneficiary designation, contact the financial institution that provides it and ask them.

Naming a Child as Your Beneficiary

Children can inherit in Utah, but they cannot legally own or manage significant property until they are 18 years old. Due to this, naming them as a beneficiary, especially on a financial account, can be a mistake. The court will have to get involved and appoint someone to manage the property for them. This individual may not be someone you want to manage the property. You do have options to prevent this from happening. You can place the property in a trust and the trustee you name will manage the property, you can ensure your estate plan has a contingency for this by creating a subtrust for any minors that may inherit property from your estate, or you can name a custodian or property guardian in your will.

Not Specifying a Beneficiary

What may seem very clear to you is not always clear to others. For example, you may designate ‘my children’ as your beneficiaries. If you have biological children and stepchildren, this may create confusion about whether you meant all of them, or only certain children. This may require court intervention to resolve, which can be lengthy and expensive. Always use full names when designating beneficiaries to avoid this mistake.

Not Naming Contingent Beneficiaries

Your chosen beneficiaries are likely loved ones, so you do not want to think about outliving them. Unfortunately, it can and does happen in some cases. If this is the case and you do not update your beneficiary designations, state law will determine who receives the property. Always name contingent beneficiaries so your plan is prepared for whatever happens in the future.

Our Estate Planning Lawyer in Utah Can Ensure Mistakes are Not Made

Whether you are naming beneficiaries or drafting documents for your estate plan, it is important to speak to a Utah estate planning lawyer. At AGS Law, we can draft your comprehensive plan and ensure no mistakes are made so your wishes are respected. Call us today at 801-477-6144 or fill out our online form to request a consultation and to get the help you need.

Source:

le.utah.gov/xcode/Title75/Chapter2/C75-2-P5_1800010118000101.pdf