New Jersey allows you to name a person, an organization, a trust or an estate as a beneficiary. When you’re naming your beneficiaries, there are several mistakes to avoid to reduce the chances of problems in executing the will or estate plan.
Referring to beneficiaries as “my children”
New Jersey requires that you name beneficiaries by their full names for the will to be valid. You’ll want to avoid referring to your beneficiaries by non-specific terms like “my children” or “my sister.”
Failing to consider the financial impact
A common mistake that people make is failing to consider the financial impact an inheritance will have on the beneficiary. If the person is irresponsible with money, then leaving them a large sum is detrimental. This doesn’t mean that you must leave them with less. An option you have is setting up a trust with restrictions on how much they can withdraw each year and how they can use the funds.
Failing to promptly update your estate plan
Policy changes with your financial accounts could cause issues with your estate plan administration. You should immediately update your estate plan with the new documents to keep it valid. Don’t forget about any relevant insurance policies as these also affect your estate.
Keeping your family and beneficiaries in the dark
It’s understandable that you may not want to tell anyone of how you want to divide your estate. However, to never mention your intention of keeping it to yourself could result in conflict after your death. If you know that you don’t want to name someone as a beneficiary, you may want to consider informing them in advance, as difficult as that conversation would be. This gives them time to process their emotions now rather than when they find out they aren’t in the estate plan after you die.
Take your time in thoroughly planning out what you want to do with your assets. It will help you avoid making mistakes and ensure that you draft a plan you’re happy with.