Like most things that matter, estate planning is no walk in the park. You want to make sure that your loved ones will be secure and taken care of when your time comes or in case you are incapacitated. It’s something that concerns a lot of older adults who want to make such decisions while they are mentally and physically able to. Despite your best intentions, estate planning can go awry. Simple mistakes that can be avoided can result in your family facing high legal fees and getting pulled into lengthy disputes.
Here are some of the most common mistakes that should be avoided for robust estate planning.
Not Updating The Documents
It is recommended that estate documents and beneficiaries are updated every four years or after every major life event. It’s important for you to update these documents in the event of a birth, death or divorce. You also need to review estate documents if you move between states, as laws regarding beneficiaries vary from state to state. Updating documents is the only way to make sure that your assets and wealth reach your loved ones as per your final plan.
Giving It Away Too Soon
Some folks establish a trust for their children with the thinking that the kids would be able to handle their inheritance responsibly upon coming of age. However, setting the trust’s maturity in their young adulthood can lead them to exhausting it too soon. It’s better to delay the trust’s maturity until the kids are older.
Not Hiring A Proper Estate Attorney
You can draft your own will on a napkin and it would hold up in a court of law. However, there are many legal issues that need to be looked at to ensure the will’s execution goes exactly as you planned it. Having an estate attorney to help you will allow for smarter estate planning. An attorney will guide you through all available estate planning options like living will, power of attorney, etc. so that you get the best possible outcome.
Not Establishing A Life Insurance Trust
If a life insurance trust is not established, it can cause heavy taxation on the policy in the event of your death. Rather than letting the payout go to the IRS, protect your policy by establishing a life insurance estate. This means that your beneficiaries get to benefit properly from the payout amount.
Not Creating Or Updating Your Powers Of Attorney
Power of attorney is a legal document that designates who will make financial and health-related decisions for you in case you are incapacitated. It is important that you draft and update both financial and health powers of attorney when planning your estate so that your wishes are carried out the way you want.
Choosing The Wrong Executor Or Trustee
Many people believe that choosing a family member as an executor is a wise decision since they are blood and ergo, trustworthy. This usually backfires, especially in light of unforeseen family disagreements. It is better that you hire a complete outsider for these duties, in order to avoid conflict.
Not Making An Estate Inventory
It’s important that whatever you have planned is within reach of a trustworthy person and your estate lawyer. Make sure that important documents are protected in a secure place like a fireproof safe from which they can be retrieved when needed to settle matters.