How much do you know about estate planning? Read on to learn more about 7 common estate planning mistakes that you should avoid.
Only one-third of Americans have some sort of estate plan in place. But, it’s not just important to have a plan – you also have to ensure that your plan doesn’t have any major flaws.
So, how do you avoid running into problems when you’re estate planning?
Read the rest of this estate planning guide to learn about the top estate planning mistakes you should watch out for.
1. Not Making a Plan
The most obvious estate planning mistake you can make is to not draft an estate plan in the first place. Even if you’re young, and don’t have a partner or children, you still don’t want to leave your assets at sea if tragedy does strike.
Even if you don’t have a lot of assets, there are still a lot of other reasons you’ll want to have an estate plan. Don’t procrastinate making a plan for your estate – this will cause a lot more hassle for your loved ones in the event that something does happen to you.
2. Not Updating Your Plan
Your estate plan needs to be updated regularly based on your life circumstances. For example, marriage or children can be a reason that you need to update your estate plan.
If you’re someone who forgets things regularly, you might want to set up a reminder for yourself. If you use an online calendar, you can put in an event to remind you to take a look at your estate plan at least once every calendar year.
3. Trusting the Wrong People
You need good, solid advice when you’re estate planning. So, you should take advice from professionals, not from friends or family members who might have incorrect information.
Your estate will also need an executor. Your impulse might be to ask an immediate family member, particularly if you have a spouse. But, executing an estate happens during a difficult and emotional time, and especially if the executor you choose doesn’t have previous experience or training they might not handle things well.
Probate can be a complex process, and depending on your estate it can take a long time. An estate planning attorney can help you choose the right person for your needs.
4. Not Communicating With Your People
You need to ensure that the people who will be involved in your estate plan know what your plan is, even if they may not disagree with all your choices.
You don’t want anyone to end up blindsided, or confused about what they’re supposed to do. That’s especially true if you have a large estate, and your beneficiaries might end up with legal or finance obligations because of your plan.
That way, you can walk them through what they need to do, or ensure they have contact information for estate professionals who can help them out when the time comes.
5. Forgetting Non-Financial Aspects
Your estate isn’t just about planning for financial or property distribution when you’re gone. Your estate can also involve appointing a power of attorney, who can make financial or legal decisions for you if you’re incapacitated.
It can also involve a healthcare proxy, who can make healthcare decisions for you if necessary. You’ll also need to plan for what happens in terms of long-term disability, if you’ll need to allocate money for your care and maintenance.
Nowadays, more of our lives are available online. You’ll want to have a plan in place for what happens to your social media accounts, and who will have access to your online information, data, and accounts after you’re gone.
You should also make a plan for what happens in the immediate aftermath of your death. You’ll want to have a plan for your funeral and for your final resting place.
You’ll have to decide between burial, cremation, or other options. Funerals and gravesites can get expensive, too, so you’ll want to put money aside so that your loved ones can afford it. You don’t want anyone to go broke paying for a funeral, after all.
6. Remember Taxes
Many people forget to take taxes into consideration when they put their estate together, which is a massive mistake. One of the top pieces of estate planning advice you can get from the professionals is to ensure that you plan for taxes when you’re making an estate plan.
You can also use taxes to your advantage. For example, there are currently gift exceptions to estates that can be used to reduce that amount of income tax that your loved ones will have to pay once you pass away.
7. Keep Your Plan Safe
Having an estate plan is all well and good, but if no one can find it when they need it. Keep the original documents in a fireproof safe, so that they’ll be safe and sound – and accessible.
Make copies and ensure that your loved ones and executors know how to access them. You can make digital copies as well, but in that case you’ll want to be very careful about security.
Don’t store your estate documents in the cloud, since that’s increasingly subject to hacking and cybersecurity issues. Ideally, keep your digital estate copies on an external drive that’s been properly secured.
Avoid These Estate Planning Mistakes Today
Now that you know about these estate planning problems, you’ll be able to protect yourself. So, sit down, and start making a plan for your estate ASAP.
Do you need a professional to help you with your estate plan? Contact us today to get started.
