Although some New Jersey residents may assume that the most common estate planning errors that are made have to do with the wording of a will or trust, two of the most common mistakes are actually not keeping named beneficiaries updated and using online tools for document creation. Many people are not aware that the beneficiary named on a retirement account or insurance policy actually overrides the beneficiary designation in a will.
A common result of this is that an ex-spouse ends up as the named beneficiary on a policy because someone does not change the designation following a divorce. Once the person dies, even if their will has been updated to reflect their new desires, the ex-spouse will end up with whatever funds are available from the account.
Another common mistake is when people use online tools to create their wills or other estate planning documents. Although online services can be helpful, it is important that people know how to use them as well as the legal implications of what they are stating in their will. If a will is not written correctly, it may cause the beneficiary to be responsible for more taxes than if it was prepared correctly.
It is important that people keep their estate plans up to date. Even if someone has what they believe to be a complete plan, if can easily become out of date if they divorce or a child is born. Additionally, laws may change, even if an individual’s life situation stays the same, which may affect their plan. A lawyer could assist people in ensuring that their wills are current based on their situation and the laws in effect.