Estate planning is one of those tasks that often gets pushed to the back burner. However, estate planning is important because it can help ensure your properties are divided according to your wishes after passing. Without a solid estate plan, you may risk leaving your loved ones with confusion, delays and potential legal disputes.
Many people assume that estate planning is only for people with sizeable assets. However, estate planning is essential for everyone. Estate planning involves organizing and protecting your assets, preparing for incapacity and addressing taxes. When creating an estate plan, mistakes can be made that can make everything more complicated.
How to avoid estate planning mistakes
Below are five common estate planning mistakes, along with tips on how to avoid them.
- Not having a will: A will is critical to estate planning. It outlines how your assets should be distributed. Without one, state laws will dictate asset division, and the decision may not match your desires. A valid will can help your property be passed on per your terms.
- Outdated beneficiaries: Changes such as marriage, divorce or a child’s birth can affect your beneficiary plans. Not updating your beneficiaries on insurance policies, retirement accounts and bank accounts may lead to undesired outcomes. Always review and update beneficiary designations regularly to reflect your current wishes.
- Not considering tax implications: Failing to plan for estate taxes, capital gains or other potential tax burdens may reduce the value of your estate and impact the inheritance your loved ones receive.
- Overlooking healthcare directives: In addition to asset distribution, estate planning should address potential healthcare decisions. Without advance directives, such as a living will or durable power of attorney, your family may struggle to make medical decisions on your behalf if you become incapacitated.
- Not seeking legal guidance: Estate planning is complex and attempting it alone may lead to costly mistakes. Professional and legal guidance can help make the plan sound, comprehensive and tailored to your needs.
Having a comprehensive estate plan is very important, and seeking legal assistance can help you not make mistakes with the important elements of your estate plan. By avoiding these mistakes, your assets can be inherited and managed by whoever you desire and you may be able to provide for your loved ones with more confidence.