Estate planning is an important process that ensures the distribution of your assets according to your wishes after your passing.
However, during this process, many people make avoidable mistakes that can lead to complications and legal issues down the road.
Procrastinating the process
Did you know that only 46% of Americans have a will, much less an estate plan? One of the most common estate planning mistakes is putting it off until it is too late. Like others, you may think you have plenty of time to plan your estate, but life can be unpredictable. Start estate planning early to protect your assets and heirs.
Neglecting to update your plan
Failing to update your plan when you get married, divorced, have children or experience other significant life events can result in unintended consequences. Therefore, review and revise your estate plan periodically.
Not having a clear beneficiary designation
Failing to name a beneficiary or designating the wrong person on your retirement accounts and insurance policies can complicate the distribution of assets. Ensure that your beneficiary designations align with your overall estate plan.
Overlooking the importance of a will
Some people believe that they do not need a will if they have other estate planning documents in place. However, without a will, your state’s laws may dictate how your assets get divided. In addition, your loved ones should understand your estate planning decisions.
Ignoring tax consequences
Failing to consider the potential tax consequences of your estate plan can result in a significant reduction in the inheritances your beneficiaries receive. Develop strategies to minimize their tax liabilities.
Estate planning is an important process. Starting your estate plan right away can prevent disputes and confusion among your loved ones upon your passing.