Lisa Powers, elder law attorney, shares "10 Common Errors When Naming Life Insurance Beneficiaries That Will Hurt Your Loved Ones". If you make a mistake in naming beneficiaries for your life insurance policy, you could hurt the very people you're trying to protect. These mistakes can hurt you and your loved ones no matter where you live in the United States.

1. Naming minor children. If proceeds of your life insurance are directed to your minor child (instead of to a trust for his/her benefit), a judge will decide who controls the proceeds and when your child receives them. And your child could get access to all of that money at 18 if you are a New York resident. That’s bad news. And unnecessary. Your estate planning attorney can counsel you on the best way to leave life insurance proceeds to minor children.
2. Naming a person with special needs. By naming a child with special needs child or other person eligible for government benefits as a direct beneficiary, you could unwittingly disqualify them from receiving those benefits. Instead, you could name a special needs trust. We can help you with that.
3. Not considering community property and/or spousal rights. You don’t have to name your spouse as a beneficiary, but if you live in a community property state, your spouse will need to sign a waiver before you can name someone else as beneficiary. And, if you name a married adult child as the beneficiary of your policy (without a trust), you could be putting your child’s inheritance at risk inadvertently.
4. Ignoring tax consequences. While life insurance proceeds are usually income tax-free, they are subject to the estate tax. Talk to us about these issues so we can identify any traps for the unwary.
5. Trying to use your Will. A properly executed beneficiary designation form always trumps your Will, so don’t make the mistake of thinking you can change beneficiaries by naming someone else to receive insurance proceeds through your Will.
6. Failing to update. Many ex-spouses are enriched by a life insurance benefit because their ex forgot to update the policy’s beneficiary form. Review your beneficiary designations every time you have a significant life change, or at least every three years.
7. Not being specific. You should name your beneficiaries in as specific a manner as possible, which means using their legal names, not just a designation such as “my spouse” or “my children.”
8. Not informing family or losing track of policies. If you have a life insurance policy, tell your family about it. Otherwise, it may be overlooked and the benefit never claimed. The best planning attorneys work to help clients track assets.
9. Not considering individual circumstances. If you leave a large sum of money to an adult child with a substance abuse problem or someone not equipped to handle money, this can lead to more problems. Consider establishing a trust that can protect your beneficiaries’ inheritance. We can even protect these assets from bankruptcy, creditors and divorce, for multiple generations.
10. Naming only one beneficiary. If you name only one beneficiary and that beneficiary dies at the same time, or before you, the proceeds of your insurance could wind up passing by state law. To prevent this from happening, name contingent beneficiaries.