Forbers:  Applying Murphy’s Law, “If anything can go wrong, it will,” to estate planning is crucial because in this case when something does go wrong, it goes very wrong and you aren’t around to fix it. Murphy’s Law at first glance appears to be overly pessimistic but the original intention of Capt. Edward A. Murphy wasn’t to depress anyone; it was to have a successful outcome. Edward Murphy was an engineer who was involved in the U.S. Army Air Force Aero Medical Laboratory’s project MX-981. Project MX-981 was designed to test the effects of deceleration forces of high magnitude on the human body. When a technician wired all of the strain gauges backwards, Capt. Murphy was heard muttering his famous phrase and the rest is history. Since they assumed mistakes were being made and things would go wrong, the attention to detail was heightened and the inevitable errors were caught. When asked during a press conference how it was that nobody had been severely injured during the tests, Dr. John Stapp credited Murphy’s Law, indicating that it was important to consider all the possible things that could go wrong before conducting a test, and then counteracting them.

A few years ago, I was going to give a financial education workshop to a group of petroleum engineers near Bakersfield, California and I happened to meet someone on the airplane who regularly presented to engineers. He gave me some advice to challenge them to find something wrong in the workshop—a statistic or a calculation with an incorrect formula, something like that. First of all, my flight companion mentioned, they are doing that anyways, but when they don’t find something, credibility instantly increases, and if they do find something, you certainly want to know. We have a lot to learn from the inquiring mind of an engineer and how he approaches his task constantly looking for mistakes, possible problems, and worst-case scenarios. Most people take the approach that “everything is fine.”

Everything is not fine. My experience with estate planning is that there are mistakes, oversights, and omissions all over the place. Over my 25-year career, I have seen countless horror stories. One of the worst cases I encountered was a young woman in her thirties whose mother sadly passed away from breast cancer in her early 50’s. The mother had listed her own mother (the grandmother) instead of her children as the beneficiary on her IRA plan (presumably when the children were minors). Unfortunately, the grandmother was on Medicaid so any funds inherited were to go to the state. I am sure the mother never dreamed that she had the wrong beneficiary.

Having the wrong beneficiary is a very common mistake and when it goes unnoticed, there can be dire consequences to your loved ones. Here are five estate-planning mistakes that you should assume you are making and take immediate steps to fix:

You have the wrong guardian listed for your children: A will is a hand from the grave to give instructions to your state as to who you choose as guardians to care for your children. If you don’t have a will, the state decides who will care for them at a hearing. If you do have a will, review it assuming Murphy’s Law that something will go terribly wrong. Check to see if your original guardian is still valid. The guardian listed for my god-daughter is being asked to transfer with his job from Davis, California to Singapore. If that happens, the parents may want to amend the will and choose another guardian.

Assume your choice will be challenged. A judge is required to act in the best interest of the child so consider also writing out a letter of explanation as to why you chose this guardian. According to this article by Nolo Press, the judge will consider the child’s preference (to the extent it can be ascertained), who will provide the greatest stability and continuity of care, who will best meet the child’s needs, the relationships between the child and the adults being considered for guardianship, and the moral fitness and conduct of the proposed guardians. If you write a letter of explanation, the judge has more information to base his or her decision on.

You have the wrong beneficiary for your IRA or 401(k) from a former employer: As mentioned above, this is a very common mistake. Single parents list the grandparents as beneficiaries when children are minors and never change it when the children reach the age of majority. Couples who divorce never change the beneficiary on their plans even after the divorce is settled. Since the beneficiary information doesn’t show up on statements and the original paperwork isn’t easily accessible, it comes down to “out of sight, out of mind.” The problem is beneficiary accounts like 401(k)s and IRAs bypass probate. Usually that is an advantage, but when there is a mistake, it might not be able to be corrected, and if it can be, it might involve expensive litigation. The parties involved would have to determine your intention and, of course, you aren’t around to speak up for yourself. Assume you have the wrong people in place, and set about putting the right ones in place.

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