District of Columbia residents who create even a basic estate plan might be unintentionally sabotaging the efforts put into those documents. For many people, estate planning is the way to pass on their assets after death. However, in an effort to either avoid probate or make it easier on family members, some people end up contradicting their efforts.
Some District of Columbia residents are advised to add their intended beneficiaries to certain assets such as bank accounts, homes and vehicles as joint owners. This may accomplish the goal of avoiding probate, but it comes with numerous complications. The individual could easily lose control of his or her assets because, as a joint owner, the other party is considered a legal owner as well. Creditors, ex-spouses and even the now-joint owner could end up attaching or depleting the assets.
Beneficiary designations on accounts such as life insurance policies and retirement accounts could also counteract a person's intentions in his or her will or trust. Regardless of what estate planning documents indicate, beneficiary designations trump them. If these documents are not kept up-to-date, the proceeds of the accounts could end up going to someone whom the account owner did not intend to receive them.
For these and other reasons, it is critical that estate planning is done with the advice and guidance of someone familiar with the ramifications of an individual's choices. Keeping control of his or her assets during life could make the difference between a comfortable retirement and a financial struggle. Moreover, proper planning can ensure that family members are provided for after death.
Source: thetimesherald.com, "Do you have an estate plan or just documents?", Matt Wallace, March 14, 2015