Do you assume that estate planning essentially just means writing out a will that says which one of your heirs gets which assets? That’s part of the process, but it’s definitely not the entire process.
You need to fulfill multiple steps and consider the ways that some of your documents interact with one another.
For instance, some of your financial plans allow you to name a beneficiary. Examples of these types of plans include:
- Mutual funds
- Life insurance policies
- Retirement accounts
- Annuity contracts
This is certainly not an exhaustive list, but it shows why you need to check everything over to make sure you really understand what the documents asked when you set them up. You likely already picked a beneficiary who will get the money when you pass away. If you didn’t, you may want to do so now in order to avoid disputes at a later date.
That said, it is also important to remember that your will should match the beneficiary designations, if it mentions them at all. If it’s different, your will has no power. The beneficiary designations come first, and the companies will follow them, no matter what the rest of your estate plan says. If you change your mind on how you want something to work, don’t just put it in your estate plan; contact the company and update the beneficiary designation as well.
The key is to consider the estate plan as a whole. Make sure you know what steps to take, how the different parts of the plan work together, and how you can set everything up to minimize the odds of a dispute and accurately transfer your wealth to the next generation.
