Although in the past it may have been, estate planning isn’t just for the super rich anymore. Rather, it’s a very useful tool that should be used by pretty much everyone to make sure that their affairs are in order if they unexpectedly pass away.
However, estate plans can be complicated. A lot of people have trouble creating their first estate plan, making mistakes and doing things the wrong way. With this in mind, I’ve put together a short list of the top seven estate planning mistakes to avoid. They include:
- Doing things yourself
Although it can be tempting to save a bit of money by putting your estate plan together by yourself, I’d seriously recommend against doing this. In reality, estate plans are complicated collections of legal documents that should be put together by a professional estate and wills lawyer.
- Forgetting to plan for minors
One of the most important components of estate plans deals with the future of minor children and other dependants if both parents were to pass away before they reached adulthood. Unfortunately, a lot of people forget to plan for their children. It’s important to at least name a guardian, among other things.
- Not optimizing things for tax
One of the key functions of a decent estate plan is to optimize your finances and other assets in terms of tax. When you pass away, your beneficiaries could be stuck with quite large tax bills if you don’t consider it when you’re putting your estate plan together.
- Naming the wrong executor
The executor that you name in your will needs to be someone who is level headed, who will take their time and make sure that all of the conditions of your will are met, and who you trust. Unfortunately, a lot of people name the wrong executor. Don’t make this mistake!
- Not keeping things up to date
Really, your estate plan should be continually evolving. It’s a good idea to use a lawyer or other estate planning expert to keep your plan up to date, otherwise you might find that you forget about it and it quickly becomes outdated and irrelevant.
- Forgetting to update ownership
Similarly, it’s important to update your estate plan every time you dispose of or gain possession or major assets like property or motor vehicles. Failing to do so can also result in your plan becoming out of date quickly.
- Failing to coordinate the entire estate plan
Estate plans can consist of numerous documents and entities, including wills, trusts, and retirement plans. Because of this, it’s very important to make sure that you coordinate all of your documents in terms of tax obligations and long-term planning, otherwise problems can arise.
Although estate plans can be complicated and there are a lot of mistakes to be made, it’s important to remember that it’s also easy to do things right if you’re careful and take your time. Make sure that you speak with a professional estate planning expert and work alongside them to create your plan. Good luck!