We see a lot of situations in which people who are developing an Estate Plan have the idea, “Okay, I want it to go to my children in equal shares.” This sounds like a simple, reasonable and fair request. But, potential problems can arise when they haven’t addressed, “Well, what happens if you outlive one of your children?”
In this Estate Planning Minute, Wes Coulson, Illinois Elder Law attorney, discusses another common estate planning mistake and what can happen when we fail to account for the possibility of outliving our named beneficiaries in our estate plan.
Common Estate Planning Mistake #14: Failing to account for the possibility of outliving your named beneficiaries
Transcript:
Hi, I’m Wes Coulson and this is your Estate Planning Minute. This is another in our series on Common Estate Planning Mistakes. The one I want to talk about today is failing to take into account the possibility that you might outlive some of your beneficiaries.
We see a lot of situations in which people have an idea, “Okay, I want it to go to my children in equal shares.” But, they haven’t addressed, “Well, what happens if you outlive one of your children?”
Unfortunately, I have to tell you, that it happens and it happens more often than you would like. The law has default rules that apply in those situations. But, if you’re taking the trouble to put an Estate Plan into place, I really don’t think you necessarily really want to rely on those default rules.
One of the default rules, in the situation I gave you, is, “Well, it goes down to their children.” Well, but what if those children aren’t yet 18 years old? Then you’ve set up a situation in which they can only receive their shares by each having a guardianship set up through the court.
So, not only can it produce a result you didn’t want, you can waste an awful lot of money in the process. So, you really need to think through the possibility of people dying before you and to make sure you made clear your intentions on who’s going to inherit in those situations. Thanks.
For more Common Estate Planning Mistakes, visit these articles:
- Common Estate Planning Mistake #4: Assuming that you can always change things later
- Common Estate Planning Mistake #7: Failing to include enough powers in a Power of Attorney for Property
- Common Estate Planning Mistake #12: Failing to fund a Living Trust
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