When individuals in Texas think about the process of estate planning, they often focus on what to include in their wills. They also are careful about whom they choose as beneficiaries. However, many people forget how important it is to update their beneficiary information on their wills as well as on financial products, such as life insurance policies and 401(k)s.
For many people, their beneficiary designations are, in fact, their estate plans. Part of the reason for this is that many people in America have most of their assets in products such as insurance policies. Another reason for this is that beneficiary designations on these types of products are legally binding; they usually take precedent over any wishes people have included in their wills. This can lead to unpleasant situations if the beneficiary information is not updated.
In many situations, people set up beneficiaries on the first day of work and end up working for the company for 15 or 20 years, during which time they forget about the beneficiaries they have chosen. In that span of time, people's lives could change dramatically. For instance, they may get divorced and then remarried, or perhaps they have children or grandchildren who were not around years ago.
Accidentally leaving an estate to an ex-husband or ex-wife is a common mistake. Another common error is disinheriting one's stepchildren. Proper legal guidance may help people in Texas to appropriately choose and update their beneficiaries as part of the estate planning process, with the goal of not adding complexity and cost to the process of inheritance.
Source: USA Today, "Your ex could get rich if you don't update your beneficiaries", Jeff Reeves, Jan. 14, 2016