The process of estate planning is not a simple one. When many individuals plan their estates, they make mistakes. Those mistakes can be disastrous. If you avoid these common estate planning mistakes, then you might be able to avoid a major problem.
The Importance of Estate Planning
There are several reasons that estate planning matters. For one, your estate is your legacy. It is a way for you to pass down your assets to your heirs, and it’s your last chance to do so. When you make one or more estate planning mistakes, you put your legacy at risk. Your wishes might not come to reality. In some cases, your estate planning mistakes could cost your heirs a great deal.
You worked hard for your assets. Therefore, it’s important that your hard work does not go to waste. With one small error, you can wipe out most of your estate. Instead of taking that risk, you should make every effort to plan your estate properly. There is no reason for you to give up your assets without passing them on to the ones you love.
Common Estate Planning Mistakes
The estate planning process is not simple. As you plan your estate, there are several major mistakes that you can make. Even one small error can cause a serious problem. Toa void any problems, you should avoid making these common estate planning mistakes.
When it comes to estate planning, people often procrastinate. This can have serious implications. If something happens to you before you pass away, then you have no say in where your assets go. Instead of you dictating the distribution of your assets, the government decides. Your state legislature has laws of intestacy. According to your state’s laws, your wealth gets distributed. The state law explains every detail of your asset distribution. For many individuals, laws of intestacy are not ideal. Don’t procrastinate, and plan your estate before it’s too late.
2. Failing to Review Documents
If you get a head start and plan your estate years in advance, then you could make another critical mistake. You could fail to review your documents periodically. Over time, your assets change. Likewise, the estate tax laws also change. It’s important to review your documents periodically. If there are any changes that you want to make to your estate, then make them. Failing to update your documents could be the beginning of a disaster.
3. Title Assets and Beneficiary Designations are Incorrect
No matter what your will says, your beneficiary designations trump your will. It’s important to get the help you need to make sure that your title assets and beneficiary designations are correct. You should also be sure to properly title your assets.
4. Not Funding a Revocable Trust
Your trust should meet all of your goals. However, your trust does not exist if there are no assets in it. If you don’t transfer the titles of your properties to the trust, then your trust doesn’t exist. All your work could be a waste of time. To make sure that your trust counts, you should transfer your properties or name the trust as a beneficiary.
5. Failing to Have “Pour Over” Provisions
Without “pour over” provisions, your estate planning could be a failure. If you missed titling any assets in your trust’s name, then they get transferred to the revocable trust when you pass away. Your “pour over” provisions prevents your missed assets from going somewhere they don’t belong. However, you should know that some assets go to the designated beneficiary no matter what your trust says.
6. Not Knowing the Benefits of a Trust
Many people are unaware of the many benefits that come with the creation of a trust. If you want management help for your heirs, then a trust can help. Additionally, a trust can allow you to distribute money to your beneficiaries on your own terms. It can also avoid the public process of probate.
7. Hiding Your Documents
Although it might not be intentional, you could hide your documents from your family. If you do so, then no one will know about your estate plans. This is one of the estate planning mistakes that can have the most devastating outcome. When no one can find your documents, the state legislature dictates where your assets go.
In a similar vein, you should make it easy for your family or friends to find a list of your social media accounts and passwords. This allows them to access your social media account and close them down.
8. Failing to Get Help
If you want a successful estate plan, then you need help. Trying to do everything on your own can cause a serious problem. With so much at stake, there is no reason to put your assets at risk. The best way for you to avoid the most common estate planning mistakes is to hire a lawyer with experience in estate planning.