Estate planning is an important task that ensures your assets get distributed according to your wishes after you pass away.
However, many people make avoidable mistakes that can lead to complications for their loved ones.
Neglecting to create a will
Did you know that only 46% of adults have a will? Failing to draft a will is a common error that can result in confusion and disputes among family members. A will clearly outlines how you want your assets distributed.
Ignoring the importance of beneficiary designations
Some assets, such as life insurance policies and retirement accounts, allow you to designate beneficiaries. Overlooking this step may mean your assets do not go to the intended recipients. Therefore, regularly review and update your beneficiary designations.
Underestimating the impact of taxes
Failing to consider the tax implications of your estate can lead to a significant reduction in its value. Research and implement strategies to minimize the tax burden on your assets, allowing more to go to your beneficiaries.
Overlooking a health care directive and long-term care
Estate planning is not only about distributing assets. It also involves making decisions about your healthcare in case you become incapacitated. A health care directive outlines your medical preferences and appoints someone to make decisions on your behalf.
You should also plan for potential long-term care needs. Explore your insurance options or other strategies to protect your assets.
Not establishing a trust
While a will is important, a trust can provide additional benefits. Your heirs can avoid probate and you gain more control over asset distribution. Explore whether setting up a trust aligns with your specific goals and needs.
Marriage, divorce, births and deaths in the family are pivotal events that should prompt updates to your plan. Ensure it remains aligned with your current circumstances.