Estate Planning Mistakes To Avoid

Estate planning plays an important part of everyone’s life, regardless of their financial situation. As such, you will want to make sure you avoid some of the most common mistakes regarding one’s estate plan.

Many people believe that estate planning is for wealthy individuals, while others think it’s too early for them to give estate planning a thought. 

If you’ve fallen into any of these misconceptions, don’t worry, most people do. However, it’s important for you to know the facts because they will save you and your loved ones a lot of trouble. Truth is, estate planning is for everyone, regardless of what their financial status is and how healthy they may be.

We’ve listed some of the most common mistakes when creating an estate plan. Here’s how you can avoid these costly estate planning mistakes! 

Not Considering Mortality

One of the biggest mistakes you can make in your estate plan is not considered your mortality. It’s not fun to think about but yes, everyone will die one day. A lot of people avoid dealing with the fact that they will die and leave their families in a tough situation after their demise. 

When it comes to proper estate planning, considering your own death is one of the most important aspects of the plan. You must make arrangements for what will happen after you pass. If you fail to do so, your family will most likely have to hire an attorney to guide them through the probate court process, which can be costly and time-consuming.

Outdated Beneficiary Designations

All estate planning attorneys advise their clients to review their estate plans after regular intervals. A lot of people do not think it is necessary to review the plan once they finalize it. You need to understand that an estate plan is not the finalized version until you pass away.

Life goes through major changes such as marriage, divorce, the birth of a baby, and family/friend relationship changes. After your life goes through a major change, it is wise to review your estate plan. Not reviewing the estate planning documents may put your family in trouble because of improperly named individuals in your estate plan.

Outdated Asset Ownership and Beneficiaries 

Updating the beneficiary designations is essential for every individual. It is important for you to know that the will does not affect who inherits certain assets such as retirement accounts, life insurance, and other annuities. Failure to make these updates to the estate plan might make your assets end up in the hands of the wrong person. A wise approach is to review and update the asset ownership and beneficiaries after your life goes through a major change. Reviewing asset ownership is as important as reviewing the beneficiary designations. 

Uncoordinated Estate Plan and Retirement Accounts

Another common mistake is when people use trusts as a conduit for retirement plans. It is only advisable to do so when trusts are properly drafted as “qualified beneficiary” trusts. If one names the wrong trust type as an IRA beneficiary, it can accelerate the trusts. If you find all this complicated, you may name individuals as beneficiaries rather than a trust. 

If you want to keep your family safe and want to ensure that all your assets are dealt with exactly how you want, you should pay attention to your estate plans.