We mentioned in a post last week that many estate planning documents are meant to be treated as living documents. Practically, this means that these documents are not meant to be drafted and then filed away until the affected person passes on or is incapacitated. Instead, these documents are meant to be revised as often as necessary. When individuals wed, divorce, suffer losses in their families and go through other major life events, many estate planning documents must be updated in order to accurately reflect the affected individual’s current wishes.
Failure to update estate planning documents can cause an estate administration nightmare once you are gone or become incapable of making your wishes clearly known. As a result, it is critically important that you update your documents after major life events, including every single document requiring that a beneficiary be designated. If your previously listed beneficiary has died, has divorced you or is no longer your intended beneficiary, you must make an alternative beneficiary explicitly known.
Updating beneficiaries is a process you will need to undertake in regards to your will, any insurance policies requiring a beneficiary designation, retirement plans, mutual funds, annuities, IRAs, college savings plans, brokerage accounts and bank accounts. Failure to do so could lead your assets to be granted to someone you no longer intend to leave them to or whomever the court determines should receive them.
Keeping in close touch with an experienced estate planning attorney and advising him or her of any major life events that have occurred will help to ensure that your estate plan and other critical documents remain current.
Source: Market Watch, “Don’t make the No. 1 estate-planning goof,” Harper Willis, Jan. 23, 2014