Prior to creating an estate plan, it’s essential that you are aware of the potential errors commonly made by people. Without knowing what these mistakes are, you could end up making them yourself and jeopardizing your estate. Don’t fall into the trap of making one (or more) of the most common estate planning blunders! We’ll show you what these errors are and how to circumvent them so that your plans remain intact.
Not having a will
Failing to make a will means your possessions may be allocated according to state law; this might not be in line with how you wish for them to go upon your passing.
If you die without a will, the state will decide how your assets are distributed among your family members or next of kin. Instead of taking the chance that your property won’t be divided according to your wishes, it is important to consider planning a will.
This legal document can ensure that your property and possessions will go to those whom you care about after you pass away. Writing a will is not merely about being responsible, but it’s also an opportunity for you to make sure your loved ones are looked after in the future. Taking control of one’s legacy through creating this legal document adds comfort and assurance that your wishes will be honored.
Not keeping your beneficiaries up to date
If you fail to review and update your beneficiary designations, the people close to you may be deprived of their rightful inheritance. Make sure your assets are passed on to who you wish them to by ensuring that all information is current.
Remember to review and update your beneficiary designations regularly when crafting a will, for maximum impact over the course of your lifetime. People change over time, and when those changes are not reflected in the legal documents associated with their assets and estate planning, significant problems can arise.
If you don’t update your beneficiaries as necessary or neglect to inform the people to whom you have designated these benefits, then your assets may not go where you intended them to upon your death.
This failure can cause or result in familial strife and other difficulties among those most affected. To make sure that your estate plan is efficient and effective, it’s essential to regularly review and update the listed beneficiaries.
Not funding your trust
Failing to adequately fund your trust will render it useless and unable to fulfill its purpose upon your death.
It is important to properly fund your trust if you decide to create one. Without proper funding, a trust may not be able to fulfill its purpose when you die. The trust could fail in its duty of distributing assets and property according to your wishes if it is underfunded, causing you and your loved ones considerable frustration and unnecessary costs.
Additionally, without sufficient money, trustees may not be able to properly invest or manage the entirety of the trust’s assets to maximize potential benefits for beneficiaries down the road. Investing the time and energy now to guarantee that your trust is completely funded will undoubtedly be beneficial in the long run.
Not planning for incapacity
Without proper estate planning documents in place, should you become incapacitated, your family may have to take the arduous journey of navigating through the court system before they can make decisions for you.
If you have not created any estate planning documents, like medical or financial powers of attorney, and failed to plan for incapacity priorly, your family may be compelled to navigate the legal process in order to make decisions regarding your health care and finances.
This can put a heavy burden on them, as well as cost additional time, money and emotional stress due to the added legal process.
To spare your family from potential hardship, it is strongly urged that those over 18 years of age take the time now to create the necessary documents so their wishes are known and honored should an unfortunate accident or illness occur.
Not understanding the tax implications of estate planning
Prior to implementing any estate planning strategies, it is essential to comprehend the potential taxation ramifications that may arise.
Estate planning can be a tricky endeavor, so it’s important to do research and consult with professionals to make sure the plan you are considering has taken into account the tax implications. Many strategies can have tax savings benefits but they don’t always seem obvious on an initial look.
Before proceeding, it’s essential to understand all possible outcomes of certain plans in order to maximize efficiency and keep within legal boundaries. With the right advice and diligence, you can develop a plan that meets all of your needs while still being mindful of any potential surprises come tax time.
Overall, estate planning is complicated and can be difficult to understand. It’s essential to your legacy that you make sure your plans are set and executed correctly if you want your wishes to be respected when the time comes.
You must also make your plans regularly updated, funded, and compliant with changing tax laws. Without thoughtful preparation, your estate could go to the wrong people and be subject to costly probate costs and taxes. Take control of what happens after you’re gone by properly planning ahead!
Don’t leave yourself vulnerable—make sure you put together an estate plan that will protect you and your loved ones.
If you need help getting started, Jim at Peace Of Mind Retirement Planning offers experienced guidance tailored to exactly meet each individual’s needs. So don’t wait—give him a call today at 888-887-2581 and be ready for whatever may come your way!