What are the most common estate planning mistakes?
What do I need to know about estate planning?
What is a living trust?
What is a trust?
Should I have a will or a trust?
What is joint tenancy with rights of survivorship?
What happens if I die without a will?
Estate planning mistakes can cost you and your heirs a tremendous amount of money and stress.
Not having an estate plan may be the most common mistake. Unfortunately, far too many people put off estate planning until it is too late. There are many estate preservation tools and strategies you can use to maximize inheritance for your heirs but it’s up to you to take action.
An outdated plan could be as bad as not having any plan at all. Changes such as the birth of a child or grandchild, an adoption, death, marriage, divorce, new property acquisition, inheritance, or change of address may require changes to your plan. Additionally, tax law changes and/or changes to rules regarding investments, retirement and estate planning may warrant an update to your plan.
Dying without a will
Similar to dying without a plan is dying without a will. If you die without a will it is called dying intestate and your assets will be distributed under the Law of Intestate Succession in your state. These laws may not be in line with your wishes.
Failure to plan for potential incapacity
A durable power of attorney will allow you to select in advance who will handle your financial affairs in the event of your later incapacity. Likewise, a medical power of attorney will allow your selected person to arrange for medical care if you become incapacitated. Failure to have these two documents could mean a guardianship would be necessary. If you do not want to be kept alive on life support if your condition is terminal or irreversible, a directive to physicians should be considered.
Lack of a coordinated plan
Today’s complex financial world requires a comprehensive and integrated approach for effectively preserving your wealth and making sure your heirs are properly taken care of. A good estate plan must take into account all areas of one’s life including investments, retirement planning, tax strategies, risk management, wealth preservation and other components. No one person can be an expert in all these different areas. This is why it is wise to work with a team of professionals that collaborate among each other. A team approach will help ensure all areas of your financial life are properly addressed and that your estate plan achieves your goals in the most effective manner possible.
An example of not having a coordinated plan is having conflicts between your estate plan, property titles and other beneficiary designations. Contracts with beneficiary designations and ownership of assets override what is stated in a will. Unless your property titles and beneficiary designations are consistent with your trust or will, your assets may not go to whom you want. Make sure your beneficiary designations and the ownership of your assets are carefully coordinated with your overall estate plan.
To view the Wealth Guide: Common Estate Planning Mistakes and How To Avoid Them, click here