The Biggest Mistakes You Can Make in Your Estate Plan
In estate planning, there are many mistakes to avoid. The most common are failing to update beneficiaries, failing to fund your trust, and not making your plan flexible enough. To avoid making any of these mistakes, read on! The biggest mistake of all is to fail to plan at all. You may own assets at one time but not at another. In addition, you may own assets now, but not in the future. This is why it’s important to be as specific as possible.
Avoiding estate planning
Even though estate planning is important for the sake of peace of mind, mistakes are common and can cost you dearly. Not only can missteps undermine your intentions, but they can also create unnecessary stress for your family. Fortunately, 9 Common Mistakes To Avoid In Estate Planning, there are ways to avoid these common mistakes. Watch some estate planning videos on YouTube or search online for tips on avoiding these common mistakes. After all, your family depends on your plan. But if you’re planning to make a plan, don’t be a victim of these mistakes!
Regardless of how comprehensive your estate plan is, keep in mind that it will need to be updated from time to time. If you have a living trust, this is something that needs to be actively managed. If you choose an executor who doesn’t have the same skills as you do, this could lead to many estate problems. If your estate plan does not include a health care power of attorney, you may not be able to do that. In such cases, you may need to update your plan to reflect your current health.
Failing to update beneficiaries
There are many reasons to review your beneficiary designations regularly. For example, updating the beneficiaries on a life insurance policy could prevent your spouse from getting a bigger share of the assets than they intended. In addition, it could ensure that your beneficiaries will get the proper amount of money to fund their bequests in your will. And it’s not the only reason to review your beneficiaries: it may help you avoid unwanted surprises in the future.
Another mistake to avoid when updating your beneficiaries is failing to update them on assets. The incorrect titling of an asset could have disastrous consequences. For example, if you’re holding property as a joint tenant, if you die before the other owner, it will automatically pass to the new owner. However, if you’re naming your spouse as a beneficiary in your will, the estate may go to your spouse in an unfair way.
Failing to fund trust
Failure to fully fund a trust in your estate plan can lead to a long, complicated probate process. Without enough funds in a trust, assets cannot be transferred to beneficiaries at the time of your death. While most trusts contain some corpus to prevent them from failing, a deficient trust will not be able to be refunded or re-funded. Failing to properly fund a trust can also lead to a court-appointed Guardian of the Estate for your minor children. This person will have to provide accountings to the court in order to avoid probate.
It is crucial that your estate plan include the funding of a trust. Failure to properly fund a trust is the same as failing to name the beneficiaries of your estate plan. Your estate planner can do the deed and beneficiary designation, but they might not have explained how to fund a trust. This is a tedious and time-consuming process that you will likely not remember. However, it is vital that your plan covers all of these aspects to avoid making costly mistakes that will leave your beneficiaries in a bad financial position.
Failing to provide flexibility
Having a comprehensive list of your assets is essential when putting together an estate plan. Having this information handy will help you avoid leaving an unwanted inheritance and ensure that your beneficiaries will receive what you intended. Additionally, it will help you determine your potential estate tax exposure. A complete list of your assets will also help you identify the proper beneficiaries for any bequests in your will. However, you must keep in mind that you will need to change beneficiary designations every three to five years.