13 Mar Barry White Estate and a Hidden Trap of Estate Planning
The Barry White Estate had a sticky issue because of a divorce, or lack of it. There’s a hidden trap in estate planning that comes up a lot after a divorce and lots of messes come up because of that trap.
Barry White was divorced and then remarried and then separated, but not divorced from the second wife. And he made an incredibly common mistake. He didn’t update his plan when his circumstances changed.
An often missed part of updating a plan after a divorce is updating beneficiary designations.
Beneficiary designations are the particular direction as to who becomes the owner of that particular asset when you die. Assets that commonly have beneficiary designations are life insurance policies and retirement accounts. When you set up the policy or account, your agent probably asked you for the name of who should get it when you die and most people should and do list their spouse.
Since beneficiary designations tell us what happens, the asset won’t be part of your estate. Your will only governs what happens to the assets that are stuck. Updating your will, won’t change where the policy goes.
Read more about wills here.
So your life insurance policy that still lists your ex? The company will be ready to make the check out to them and not the people you actually want those life insurance proceeds to benefit. That’s a mess.
Beneficiary designations are part of your estate plan. You have to coordinate them to follow the plan or the people grieving you will have a mess on their hands.
Here is the hidden trap of estate planning. Your documents set up the plan, but your assets will determine whether or not the plan actually happens.
Download the asset checklist so you can keep track of what you own and how your assets transfer so you don’t have an life insurance company ready to pay out to your ex.
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