Estate planning is a complex process that involves many moving parts, and even the smallest mistake can have significant consequences for your loved ones. Whether you’re just getting started with estate planning or you’re updating your existing plan, it’s important to be aware of common estate planning mistakes and take steps to avoid them. In this blog post, we’ll discuss some of the most common estate planning blunders and provide tips and best practices for creating a solid estate plan that will protect your legacy.
Mistake #1: Failing to Update Beneficiary Designations
One of the most common estate planning mistakes is failing to update beneficiary designations. Many people forget to review their beneficiary designations when they experience major life changes, such as a marriage, divorce, birth of a child, or the death of a loved one. If your beneficiary designations are outdated, your assets may not pass to the people you intended.
To avoid this mistake, it’s important to review your beneficiary designations regularly, especially after major life changes. Make sure that your beneficiaries are up to date and that they reflect your current wishes.
Mistake #2: Not Having a Will
Another common estate planning mistake is not having a will. Without a will, a court will make decisions about how your assets are distributed after your death. This can lead to disputes between family members and may not reflect your true wishes.
To avoid this mistake, it’s important to create a will that outlines how you want your assets distributed after your death. Your will should also name an executor to manage your estate and a guardian for any minor children.
Mistake #3: Failing to Consider Incapacity Planning
Many people focus on what happens after their death when creating an estate plan but forget to consider what would happen if they become incapacitated. If you don’t have a plan in place for incapacity, a court may need to appoint a guardian to manage your affairs, which can be a lengthy and expensive process.
To avoid this mistake, it’s important to include incapacity planning as part of your estate plan. This can include a durable power of attorney for financial decisions and a healthcare proxy for medical decisions.
Mistake #4: Failing to Consider a Living Trust
If you own real estate and have minor children, a living trust provides you with the ability to avoid the cost and expense of having your estate pass through probate and outline how your assets will be distributed. A living trust also allows you to determine who will manage your assets for the benefit of your minor children and set forth distribution standards for your children as they become adults.
Conclusion
Estate planning is a complex process that requires careful consideration and planning. By avoiding common estate planning mistakes, you can ensure that your assets pass to your loved ones according to your wishes and minimize the stress and expense of estate administration. Working with TruWill can help you develop a comprehensive estate plan that reflects your unique needs and priorities.
