The Simple Estate Planning Error That Could Hurt Your Family
In this episode of the A Wiser Retirement® Podcast, Shawna Theriault, CFP®, CPA, CDFA®, and Estate Planning Attorney Arun Gupta discuss a real-life story that shows how one overlooked detail can lead to heartbreaking consequences for a family.
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Summary:
Estate planning isn’t just about distributing wealth, it’s about ensuring your loved ones are protected when you’re no longer there to do it yourself.
When a Simple Oversight Becomes a Costly Error
Travis thought he had done everything right. After a difficult divorce, he updated his will to ensure his assets would go to his children in trusts, protecting their inheritance from future issues. However, he overlooked one critical detail, his retirement account beneficiaries. When Travis passed away, those accounts still listed his ex-wife as the beneficiary. As a result, most of his wealth—nearly 90%—went to his ex-spouse instead of his kids.
Why Beneficiary Designations Matter
Many people assume that a will controls all their assets, but that’s not true. Accounts like IRAs, 401(k)s, and life insurance policies pass directly to the named beneficiaries, bypassing the will entirely. This means if you don’t update those designations after a major life change, like divorce, remarriage, or the death of a loved one, your assets might not go where you intend.
Lessons Learned
Review regularly: Check your beneficiary designations every few years and after any major life event.
Confirm titling: Make sure deeds and accounts are titled correctly, especially for jointly owned property.
Get professional guidance: Attorneys and financial advisors can help ensure your estate plan aligns with your wishes.
The Importance of Being Proactive
Estate planning isn’t just about legal documents, it’s about protecting your loved ones from unnecessary stress, financial loss, and family conflict. It only takes a few minutes to update beneficiaries, but the consequences of neglecting it can last for generations.
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