Estate planning is an important step to ensure your family receives assets according to your wishes after you are gone. However, many people make avoidable mistakes during the planning process.
Understanding common mistakes can help you prevent them, which will offer substantial peace of mind to you and your loved ones.
Not having a will
According to CNBC, 67% of Americans did not have an estate plan in 2022. Wills are an important part of estate planning, as they designate beneficiaries and specify how to distribute your assets. Without a will, your assets will be subject to state laws.
Ignoring beneficiary updates
Beneficiary designations provide instructions on the distribution of proceeds from life insurance policies and retirement accounts. Because designations supersede information in your will, you must regularly review and update this information to reflect your current wishes. You should also review documents after major life events such as marriages, divorces, births and deaths.
Neglecting healthcare directives
Healthcare directives, including a living will and a healthcare proxy, ensure medical staff and family members respect wishes if you cannot make decisions for yourself. Failing to create these documents may burden your loved ones with difficult choices.
Choosing the wrong executor or trustee
An executor is a person who carries important duties like paying creditors and distributing assets to your heirs. Because the stakes are so high, the person you appoint as an executor or trustee must be responsible, trustworthy and capable of managing your affairs competently.
Overlooking a power of attorney
A power of attorney allows someone you trust to manage your financial and legal affairs if you become unable to do so. Not having one in place could lead to court involvement, which may impede your estate plan.
Forgetting to review and update
Life is constantly changing, and so should your estate plan. Regularly revisit your entire plan to ensure it still aligns with your goals and circumstances. This will help you avoid outdated or ineffective strategies.
While thinking about your own mortality can be unpleasant, you must create a solid estate plan to protect your assets. Estate planning is important for people of all ages and health statuses, as it ensures you remain protected from unexpected occurrences.
We recommend that you retain a lawyer who understands the fabric of the law as it relates to what you want to accomplish with your estate plan. The benefit is that an estate planning lawyer may know of several different ways of helping you avoid probate, protect inheritances to loved ones on Medicaid or SSI, and protect your assets from creditors. Some people, however, wanting to save money, turn to online fill in the blank forms to create an estate plan. Sometimes these online plans work. Often, however, they create a bigger mess than you would have had if you had no estate plan at all. Hiring the right attorney can help you protect your loved ones and your assets.