People living in Nevada may inadvertently create problems for their heirs through poor estate planning. While estate planning mistakes can take many forms, one of the most common involves beneficiary designations.
Designating beneficiaries of life insurance policies, retirement plans and investment accounts is an important part of estate planning. Beneficiary designation is a separate process from writing a will or establishing a trust. For example, an individual cannot dictate in a will the beneficiary of a life insurance policy or 401(k) account. An estate owner must choose a beneficiary separately for each of these financial products.
Because estate planning involves these separate components, it may sometimes happen that one part of an estate plan conflicts with another. This is why it’s important to work collaboratively with an attorney, financial planner and even an accountant to create and maintain an estate plan.
Common mistakes include tying up the estate in beneficiary designations without leaving enough cash to handle expenses such as taxes. Trusts can also pose another problem. Some individuals will name a trust as a beneficiary, but the trust information, such as the trust’s tax ID number, may be inaccurately recorded in the beneficiary information on a retirement account or insurance policy.
Someone who is concerned about estate planning issues may benefit from speaking with an experienced attorney. Legal counsel could review the client’s financial situation and current estate plan. If necessary, the lawyer could make recommendations regarding financial and medical end-of-life planning. The attorney may also be able to work with other financial professionals to help ensure that a client’s intentions are respected.