BENEFICIARY DESIGNATIONS CAN COMPLICATE ESTATE ADMINISTRATION
After a person dies, estate administration is used to distribute the assets to heirs, pay all debts and settle the decedent’s affairs. For Ohio residents who have created an estate plan and are under the impression that it is sufficient, it is still important to be attentive about common mistakes. A prime example is the beneficiary designation on life insurance policies and retirement accounts.
The Beneficiary Designation Takes Precedence Over a Will
A frequent sticking point in estate administration is if a person’s beneficiary designations are different from what their will says. Regardless of what the will says, the retirement account or the life insurance policy beneficiaries will get those proceeds. It is imperative for those who are unsure if they have updated all documents so they match to take that step and rectify it.
If a person was married at the time they listed their beneficiaries on a life insurance policy, they are likely to name the spouse at the time on the documents. If they divorce and do not change it to benefit a new spouse, the former spouse will get an unexpected windfall. This is true even if they have changed their estate planning documents to reflect the new situation. Documents to check include insurance policies, bank accounts and annuities. This can avoid confusion in estate administration.
Understanding the Law May Prevent Damaging Mistakes
The purpose of a will and other elements of estate planning is to ensure that the person’s property goes where he or she wants it to go. That includes the above-mentioned accounts and policies. Many have made this mistake through lack of awareness or vigilance. To prevent this problem, it is vital to look over the estate plan, check the beneficiary designations and act accordingly.