Estate planning provides your loved ones with, for example, specific instructions about what to do with your assets. It’s crucial that you have your plan set up appropriate so that it will be legally enforceable.
There are certain mistakes, however, many people often make that often have negative impacts such as:
#1: Failing to plan for taxes
Individuals must consider estate taxes when creating their estate plans. If you have an estate that’s a considerable size, you may want to consider gifting to reduce the size if you are worried about estate tax thresholds. There are, however, annual limits on what you can give to a single individual or entity. Checking with a local estate planning professional who can offer advice on this specific area is advised.
#2: Failing to update assets
The only assets that should be in any estate plan are the ones that you actually own. If you sell or give away assets, you need to remove them from the plan. If you acquire new assets, you must add them to the plan. Keeping your estate plan updated as it pertains to your property is crucial; problems can arise if it is not.
#3: Failing to update beneficiaries
Your beneficiary designations must accurately represent who you want to get what. If one of your designated beneficiaries pass away, you must update your plan to remove that person and select another. In other situations, you may need to add a beneficiary if you have a new baby, grandbaby or remarry.
#4: Failing to establish end-of-life plans
End-of-life plans identity the person who will make decisions for you if you can’t make them for yourself. A power of attorney is one way to ensure the right person will be making medical or financial decisions in the event you are incapacitated.
#5: Failing to fund trusts
If you opt to create a trust, you must fund a trust so the assets can be passed down in accordance with the plan you established. Different assets are handled in different ways so it’s important to understand what needs to happen.
Ensuring your estate plan is up to date should be a top priority. It can provide you with peace of mind but also give your loved ones a plan to follow and minimize conflicts.