You may have read estate planning advice to remember to include all your assets in your will. And that forgetting something could lead to confusion about who you want to get it.
While this is generally true, there is one category of asset you should leave out of your estate plan.
Assets with beneficiary designations are already covered
When you open certain accounts, such as life insurance or 401(k) retirement plans, you designate a beneficiary to receive them when you pass away. When you die, the company in charge of this asset will refer to the designation you made and pay out the account contents to your chosen beneficiary.
One advantage of this is that the asset will not have to pass through probate and can reach the hands of the designated beneficiary sooner.
Mentioning someone twice could cause confusion
Including an asset with a designated beneficiary in your will could cause confusion, especially if you allocate it to someone different. If there is a conflict, the designation on the asset itself will take priority over any mention of it in the will, so it is best to leave it out of your will in the first place.
What about if a designated beneficiary were to die?
Assets that allow you to designate beneficiaries also let you name backup options, known as contingent beneficiaries, in case your first choice is deceased by the time they are due to receive. Regularly reviewing your beneficiary designations to ensure your named beneficiaries are still alive is recommended.
There are many ways to make an estate plan, so it is wise to learn more about the various options and get legal help to select the most appropriate ones for your needs.