Estate planning has many beneficial applications. You can address many areas of your life and ensure that your loved ones know how you would like to be laid to rest, how to divide your assets and how to handle other important tasks associated with your passing and closing your estate.
On the other hand, just because an estate plan has the potential to benefit surviving loved ones, it does not mean that you have created an effective plan. In fact, if mistakes with your plans exist, you may cause more complications for your family. In particular, you may want to remain aware of errors associated with naming your beneficiaries that could cause issues.
Direct beneficiary issues
If you would like to name direct beneficiaries to receive certain assets, you may help your family with property distribution. However, even naming direct beneficiaries can present issues. For instance, if you name a minor as a direct beneficiary, you may feel that he or she could benefit from obtaining some money upon reaching the age of majority. Of course, receiving a large amount of money at a young age may not prove as beneficial as hoped, especially if the named individual is not yet responsible with money.
Another issue with direct beneficiaries relates to naming a special needs person. While inheritances can certainly help special needs individuals with expenses relating to care or other needs, if a person directly receives a considerable sum of money, it could potentially affect his or her ability to qualify for government benefits.
In either of these cases, it may prove more beneficial to your loved ones to create a trust to hold the assets, which will then be distributed by the designated trustee according to the terms you set.
Outdated beneficiary issues
If you have already created an estate plan, you may want to consider when you last reviewed and updated your plan. The idea of reviewing your plan may seem unnecessary as you already put your wishes on paper, but really, your life could face numerous changes before your estate plan needs using.
For example, you may have felt comfortable with the beneficiaries you named when you initially created your plan, but over the years, close individuals may have passed, you may have gone through divorce, had a falling out with a friend or faced another situation worthy of an estate plan update.
Fortunately, many tools and tips relating to estate planning can help you avoid these and other issues. If you would like more information on how to create or update your plan, you may wish to gain reliable information from legal resources in your area.