As you plan your estate in Minnesota, you’re likely going to designate beneficiaries. By doing this, you’re setting up plans for who receives your assets when you pass away. Considering that, you’ll be in charge of naming your beneficiaries. While this might sound simple, making mistakes with your designations can create lots of problems. Here’s how to avoid making mistakes when naming beneficiaries.
Lacking a plan
In life, it’s always good to have a plan. This rule also applies to the planning of your estate. Having a plan for your estate allows you to choose whether you want outright distributions or have your funds set aside in a trust. A trust is a great way to give you more control over how you distribute your assets.
Leaving out assets
One of the biggest beneficiary designation mistakes is to not account for all of your assets. To avoid this mistake, make sure to not forget:
- IRAs
- Retirement accounts
- Bank accounts
- Brokerage accounts
- Real estate
- Life insurance policies
Forgetting about a beneficiary
Another common mistake people make while planning their estates is to leave out a beneficiary. If this happens, it might force your heirs and beneficiaries to receive distributions, which makes your payments taxable to any designated recipients.
Forgetting to update your designations
Some people assume that estate planning is a one-time activity, which isn’t true. Instead, it’s essential to review and update your designations. For example, imagine that one of your beneficiaries dies. If this happens, any assets designated to this person might get tied up in probate. Instead of relying on your plan to automatically name beneficiaries, manually check this information to ensure it reflects your wishes.
In conclusion, choosing beneficiaries and designating them are essential aspects of planning any estate. With that said, estate planning is often more complicated than you might think it is. If you need assistance properly planning your estate, it might be time to get in touch with an estate and trust litigation lawyer.