Estate planning is more than just drafting a will. When you produce a well-thought plan, it can help protect your loved ones’ inheritance, minimize your taxes and upkeep your final wishes.
To ensure that your legal documents are valid and free of errors, you must learn about the common mistakes that people make in their estate plans and practice measures that can help improve yours.
Having incorrect beneficiary designations
Accounts like IRAs, retirement plans and life insurance policies have beneficiary designations that often bypass the owner’s will. However, majority of people do not review their will to update their list of beneficiaries.
When this becomes the case, they may unintentionally pass certain assets to an estranged family member or an ex-spouse.
Not planning for future incapacity
Estate plans that are focused on death often overlook plans for incapacity. When someone gets into a serious accident or becomes terminally ill, their injuries or medical condition may turn them physically and mentally incapacitated.
Since they did not create a health care power of attorney and/or a living will for their future incapacity, their family must shoulder all the challenging medical decisions on their behalf.
Failing to fund a trust
When someone creates a trust but does not transfer assets into it, their trust will only exist on paper but fail to control their assets. When this happens, the assets that were intended for the trust will need to pass under a will and go through probate.
Since probate is public and often time-consuming, it can put a heavy strain on their grieving loved ones or become a source of dispute for their family members.
Estate plans need care and attention
Estate planning is an ongoing process and not a one-time task. By avoiding the common mistakes that people make on their estate plans and collaborating with a lawyer whenever necessary, you can reduce the risk of legal disputes and administrative headaches for your family.