Don't Waste Your Money Makeover: Costly financial mistakes

(WXYZ) - Consumer Reports found that a surprising number of people have overlooked some of the most basic financial precautions. That can be devastating, especially when disaster strikes.

Ten years after Karen Mendelsohn and her husband, Harold, were married, he went to take a run and never came back. He suffered a sudden heart attack.

The second blow: Neither she nor their two young children were named as the beneficiaries on his pension. He had neglected to switch it from his parents. And when Karen asked them, they said no.

They said, "If our son left us as the beneficiaries, he wanted us to have the money."

Consumer Reports says financial oversights are all too common. Its survey found that in the last five years, 86 percent of respondents had not checked or updated important estate documents, including wills and beneficiary designations.

Financial planner Rick Bloom says another frequent mistake is not having a simple will or medical power of attorney.

"Estate planning really is for everyone. Not everyone needs a trust. Every adult needs a will and needs a medical power of attorney because you need to have someone in the hospital as your advocate," says Bloom.

The State of Michigan offers a free online will that you can fill out, sign and keep for your records.  Western Michigan University offers a free medical power of attorney form to fill out.

Another frequent mistake couples make is having only one person in charge of the finances. Consumer Reports' survey found with 70 percent of married couples, only one spouse knew key details about their accounts.

And if you are over 60 and have adult children, it's time to let them know where that important information is as well.

Other "money stumbles"—50 percent of homeowners did not have enough insurance to cover full replacement of personal property at today's prices.

And more than 70 percent didn't have at least three months of living expenses set aside in case of job loss or illness.

Consumer Reports says though you may not solve everything all at once, just taking those first simple steps may save you and your family a lot of heartache down the road.

In addition to regularly updating estate-planning documents, Consumer Reports recommends designating a file cabinet or safety deposit box for your will, insurance policies, and a list of all important account and investment information.

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