Avoid These Top Estate Planning Mistakes – A good estate plan protects and provides for the decedent’s heirs. It shouldn’t cause more problems than it solves. But not every estate plan lives up to this ideal. If you want your wishes carried out, below are the top mistakes you need to avoid.
- Failing to plan. If you don’t make time to create a thorough estate plan, you’re risking the financial future of your estate, your legacy and your loved ones.
- Not reviewing your documents to make sure they’re not out of date.
- Not discussing your plans with family and friends. Even a brief conversation with your beneficiaries can tell you which of your wishes are likely to be controversial, giving you a chance to rethink.
- Naming just one beneficiary. In case your only heir dies before you do, you’ll want to have a contingent beneficiary.
- Forgetting that your retirement plan accounts or life insurance can’t be included in wills or trusts. You’ll need a beneficiary designation form or to name a revocable trust as the beneficiary.
- Forgetting about power of attorney or health care representatives. These folks step in to make decisions if you become incapacitated. In most cases, the roles dissolve on your death.
- Not delineating what your final arrangements will be. Not giving some indication of what you’d like to happen at your funeral or with your burial arrangements puts an extra burden on your family when they’re grieving. Let them know what they can do to honor you.
- Failing to include your digital assets. You should include a digital estate plan that lays out how you’d like all your digital assets — social media accounts, online banking and email — handled after you die, and name a digital executor to ensure your digital assets are handled properly.
- Not detailing what charities you want to allocate some assets to. It’s important to provide for your heirs but also to provide for other causes. That’s why you may want to name a charity as a beneficiary with the proceeds from an investment or a life insurance policy.
- Not planning for all contingencies. Wills often leave an estate to the testator’s “surviving children,” but that raises questions if one of the testator’s children dies. Does the money go to that child’s heirs or is it split among the survivors? Morbid as it may seem, wills should plan for all those possibilities.
- Failing to fund your trust. Creating a trust is only half the battle. A trust is useless unless it’s funded with your assets.
- Forgetting about taxes. You should know whether the state that you and your beneficiaries live in has a state estate tax or inheritance tax. Understand the limits before you write your will or trust.
- Failing to store your estate plan properly. A perfect estate plan is useless if no one knows where to find it. Safes and safety deposit boxes are popular options, but remember to tell someone that it’s there and how to access it.
Go with qualified professionals.
There are many myths and misconceptions about estate planning. Help your family save thousands of dollars in unnecessary taxes and probate fees by sidestepping errors. By including an estate planning attorney and other professionals, you’ll have help in drafting your plan and making any changes you want to make.
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