Estate planning is one of the hardest parts of financial planning to focus on, largely because it spurs you to think about how the world will continue on after you die. It’s easy to find more pressing issues to tackle first, like removing your wisdom teeth. But as Whitney Houston’s family painfully discovered in recent years, letting your will get stale can be bring lots of trouble. Don’t forget to update your beneficiaries — especially if you have divorced or remarried or had more children in the duration.
Fellow Garrett Planning Network member Mike Chamberlain showed the repercussions of not updating a will in his story, in Forbes online, about a widow who found out her husband had forgotten to update paperwork and inadvertently left $1 million to his ex-wife. Her new husband did not change his beneficiary on benefits — he didn’t see it as a priority — and it cut out his current wife when he died unexpectedly, giving more than $1 million to his ex-wife. That certainly outlines the dangers of not thinking ahead.
A few things you can do to prevent this situation: Have an annual review of all your life insurance policies and retirement accounts. Look online to see who is currently listed as your primary beneficiary as well as the contingent beneficiaries (those who would receive the asset if you were to outlive the primary beneficiary). Many people don’t think about these issues. If you beneficiary form does not jibe with what your want now, make a change. The form is simple to fill out and file with the companies. Make sure you put your list of beneficiaries with your other estate planning documents. Estate planning check, again: Is your will more than five years old?
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