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Updating your beneficiaries: a crucial step in estate planning

Let's say that, for many years, you didn't get along with one of your children. You didn't speak for many years and, as such, you did not include this child in your will or other documents of importance in your estate plan. But as your health started to decline, the two of you realized that the friction between you simply wasn't worth it. The two of you reconcile and for many years you enjoy a healthy, and long-awaited, relationship.

Then that day comes, and you pass away. Over the next few days, the executors of your estate compile all of the necessaries and they inform your family of who is entitled to what. The son or daughter you reconnected with doesn't get anything -- all because you forgot to update your estate plan and designate him or her as a beneficiary.

It may seem like a rare occurrence, but this actually happens more often than you would think. People simply forget to update the documents associated with their estate plan -- and as a result, their family spends many months, if not years, disputing the documents internally or in court. This can cause a lot of strife, stress and anxiety, let alone the unnecessary costs associated with disputing a will or the inheritance it contains.

It is imperative that people routinely check their estate plan and ensure that their estate is in good standing. Check your beneficiaries -- especially if a divorce or a death in the family has occurred -- and have an attorney with estate plan experience look over your documents to ensure they are proper and compliant.

Source: MarketWatch, "Don't make the No. 1 estate-planning goof," Harper Willis, Jan. 23, 2014

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