Beneficiary designations are the pivotal part of an estate plan in Massachusetts, yet people still tend to overlook it. Here are some mistakes people make when naming their beneficiaries.
Not communicating your plans to your beneficiaries
The essence of estate planning is to make it easy for your loved ones to receive your assets and know how they should deal with you and your property if you become incapacitated. It’s only fitting to give them an insight into what to expect in the future. This way, you can help avoid confusion and surprises when you are not around. Plus, it can help them prepare to handle legal, technical and emotional aspects of your estate and wishes.
Not updating your beneficiary designations
Life is bound to have unexpected changes over time. Perhaps your child marries, divorces, has kids or meets accidental injury or death. You must account for any of these changes in your estate plans. Besides, you might get a change of heart on what you designated for a loved one to receive. If that happens, you should address it in your plans.
Not understanding how beneficiary designations
Many people don’t take the time to learn how beneficiary designations work. As a result, they make mistakes that can have costly consequences. If you are unsure how you should name or update your beneficiaries, legal and financial advisors can help ensure that your assets are distributed according to your wishes.
Forgetting about your digital assets
In this digital age, more people are embracing investing and storing their assets online through cryptocurrency wallets, NFTs, and other internet platforms. It’s equally important to designate beneficiaries for these assets just as you would for physical property. Since these assets are rather more difficult to access, you may want to tell your loved ones where your private keys or other key phrases they might need to open those accounts are.
Some professionals advise estate planners not to name their spouses as their primary beneficiaries for their insurance policy or trusts, especially if they have a blended family, in order to make sure the children aren’t disinherited. If you want to protect everyone, it may be best to designate a neutral party as a trustee, guardian or executor and your children as primary beneficiaries.