Estate planning comes with a lot of benefits if you do it right. It can ensure that your assets get distributed according to your wishes. However, if you make the following common mistakes while estate planning, you could end up doing more harm than good.
Not updating your will
A will is a critical part of any estate plan, but it’s essential to remember that it’s not a one-time document. As your life changes, so too should your will. If you get married, have kids, or make other significant life changes, be sure to update your will accordingly.
Otherwise, you could end up unintentionally disinheriting your spouse or children. It’s also important to update your will when you move, as local laws can vary greatly and could affect what you’ve written in your will.
Not communicating with family and friends
An estate plan is for your loved ones, but that doesn’t mean it has to be a secret. If you pass away without telling anyone what you want to be done with your assets, they could end up fighting about who gets what.
While it may seem uncomfortable to have these conversations when there’s still so much left to enjoy in life, you must communicate your wishes with your family and friends while you’re still able to. This will help ensure a smoother transition when the time comes.
Not taking taxes into account
When you’re estate planning, it’s important to take taxes into account. This means that you need to plan for federal and state estate taxes. If you don’t, your loved ones could end up having to pay a lot of money in taxes after you die.
For instance, if you’re a business owner or have a large number of assets to pass on, then it may be in your best interest to set up an irrevocable trust to ensure that your loved ones don’t have to pay estate taxes.
While you can make some estate planning mistakes, these are three of the most common. You can help ensure that your estate plan is as effective as possible by avoiding them.