Estate planning is not a process that people go through very often. In fact, for most people, it’s a once-in-a-lifetime procedure. This accounts for why so many people make estate planning mistakes. It’s simply an unfamiliar process that you just don’t go through very often. To avoid making some of the same common mistakes that most people do, you should engage the services of a skilled and knowledgeable estate planner, so you can get it right the first time. After all, your estate is something you want to be handled correctly when you’re gone.
Making Your Estate Plan a Secret
A great many people who do prepare estate plans don’t actually discuss them with anyone else who might be involved, even those who are involved in decision-making and could be impacted by asset distribution. This includes individuals such as executors, beneficiaries, and individuals who have power of attorney. It’s much better to keep all these individuals informed about what’s in the estate plan. This serves to limit confusion. It also provides a very clear path for how you wish to have your assets distributed when you pass on. If everyone were kept informed about what’s in your estate plan, it would also tend to limit any squabbles when the details are finally revealed, because everyone would have been informed prior to the announcement of the plan details.
Doing it All Alone
It can be a very complicated process to develop an estate plan, especially one that involves a number of assets and a number of individuals who may inherit those assets. The process can be overwhelming for someone who has no real knowledge of tax information and the legal aspects involved with preparing an estate plan. If you choose to go it alone in preparing your estate plan, it’s very likely that you’ll make some blunders along the way. Some of these blunders could have significant impacts on the people you’re trying to help when distributing your assets. You’d be much better advised to engage the services of a professional estate planner. They can offer guidance and information you just won’t have on your own. They can also help you avoid the most common mistakes.
Having NO Estate Plan At All
Not preparing an estate plan could be the most serious mistake you can make when you pass on. If you die without a valid will or estate plan, it falls to the court system of your state to distribute all assets in whatever manner they see fit. Generally, this will be in accordance with whatever the state’s statues are regarding someone who dies intestate. The biggest benefit of having a formal and comprehensive estate plan is that it’s the only way you can be absolutely sure that your assets will be distributed to the right individuals.
Failing to Update Your Estate Plan
Many people make the mistake of developing a good estate plan, and then leaving it untouched for the remainder of their lifetime. While this may not necessarily come back to haunt you, it’s also very possible that some circumstances will change during your lifetime, and that it will be necessary for you to make corresponding updates to your estate plan. If you fail to make these updates, it’s possible that your assets will not be distributed in accordance with your wishes.
Omitting Healthcare From Your Estate Plan
One of the most common mistakes people make in preparing an estate plan is leaving out important medical decisions regarding healthcare. If you don’t include these decisions in your estate plan, and a situation occurs where you are unable to make those decisions yourself, they will have to be made for you by a proxy, if you have designated one. If you have a living will, it will tell your doctors and health care providers what medical decisions you want if it turns out you’re unable to decide for yourself. This will also relieve your loved ones from taking on the responsibility of having to make those decisions for you.
Forgetting to Change Beneficiaries
It’s necessary to periodically review your beneficiary information, so it is always up to date and in accordance with your wishes. This includes the beneficiaries on your life insurance policies, retirement accounts, and any investment accounts you may have in your possession. If you forget to change beneficiary information, it’s possible that proceeds from those accounts could be distributed to someone that you did not intend. For example, proceeds could be distributed to an ex-spouse.
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