Financial experts note that one of the main mistakes people make with their estate planning is simply that they let the plan become outdated. This often means that they do not update it through major life changes, like starting a business or starting retirement.
However, you can also let your beneficiary designations become outdated, and that's equally troubling. Even if the financial details are all up to date, is that money really going where you want it to go? Events that can make your plan appear outdated include:
- Ending a long-term dating relationship
- Getting divorced
- Getting married for a second (or first) time
- Having a falling out with a child
- Adopting a child
- The birth of your grandchildren
- The death of a beneficiary
For instance, maybe you wanted to leave money to your long-term significant other. You named them as a beneficiary. They didn't want to get married, though, and you did. You ended the relationship, started a new one, and eventually did get married.
Some assets pass naturally to your new spouse, but does your estate plan still leave something to your ex? How is that going to impact your spouse? What will it mean for your kids? Is the whole thing going to lead to an estate dispute and end up in court?
If you do not update your plan, you cannot guarantee that your wishes will be met when you pass away. This is something you want to do both on a scheduled basis and after any major life changes. Be sure you know exactly what steps to take.