Sometimes, we delay important decisions. This may be the case in creating an estate plan. All of us want to make sure that our affairs are in order in the event we become incapacitated or pass away. Creating an estate plan can accomplish our objectives, but it is important to make sure we do not overlook important details and try to avoid common mistakes.
Common estate planning mistakes
Here is a list of some common estate planning mistakes:
- Not having a plan in place: Procrastination leads to no estate plan at all, including not have a will or a trust. Without a will or a trust, the state decides where your assets go. If you do not have immediate family, or if you want other people or organizations to receive some of your assets as well, you need a will or trust in place, otherwise your assets may go to distant or estranged relatives instead, or possibly to the state.
- Neglecting to inform and educate your family: It can be important to make your family aware that you have an estate plan and educate them on the process. This can prevent them from being surprised or concerned when the time comes to administer your estate. It also can help them identify your assets so nothing is missed or unaccounted for.
- Choosing an inappropriate guardian for your minor children: For those with minor children, it is important to address who would raise them if you died before they become adults. Ideally, you want someone with a stable and loving home, a solid financial foundation and who has the energy to raise children to adulthood. If you do not address this in your estate plan, then they could end up being raised by someone who you would not prefer or otherwise someone who is not the best suited to take care of them.
- Failing to update your estate plans: It is recommended that you review your estate plan every few years or so, or as your life or financial circumstances change. It is great to have an estate plan, but it does not mean that you should never update or revise your plan. Whenever important matters in your life change, you should consider how that might affect your estate plan. These events may include marriage, divorce, the birth of a child, or starting or selling a business.
- Omitting proper directives: If physical and mental disabilities befall you, your finances and health may be at risk. A health care power of attorney and financial power of attorney can give you assurance that your affairs will be in order if you become incapacitated.
Preparation is essential in estate planning, but so is putting it into action. Focus on the details, carefully consider your decisions and devise a thorough estate plan. As a result, you and your families or loved ones can have peace of mind and confidence that things are going to work out.