Sadly, most Americans are indifferent to estate planning - at best - or completely ignore the issue - at worst. When it comes to estate planning, however, there are some mistakes that you cannot afford to make.
Below are the five most critical mistakes that are commonly made in estate planning:
- Not having any estate plan: This is the biggest mistake, especially among younger professionals or young parents who assume they don’t need one. Passing away intestate - or without an estate plan - will assure local law decides who ends up with what assets when you are gone. Even the guardianship of your children is up to the courts.
- Failing to properly handle paperwork: This is typically in the form of not updating beneficiary designations on insurance and retirement accounts. Some people may be surprised to learn that beneficiary designations override instructions left in a will or trust, so making a point to update them whenever a change occurs in your life will take care of this problem.
- Not reviewing documents regularly: An estate plan should be reviewed every three to five years, when there’s a new child or grandchild, a significant increase or decrease in assets, or moving to a new state. This ensures you are protecting your loved ones’ future because circumstances change over time.
- Not funding your trust: A trust relies on being funded to operate correctly. If you pass away and leave an unfunded trust behind, a probate case - what you were trying to avoid by creating a trust in the first place - is required to fund your trust post-death.
- Too much given away, too soon: As much as 50 percent of inheritances are squandered shortly after being received, meaning that it is important to space out inheritances over the course of the beneficiary’s lifetime to reduce the risk of this happening.
While no one wants to think about their own incapacity or death, this is precisely why many avoid the topic of estate planning altogether. Put your best foot forward to avoid making these critical mistakes by scheduling your complimentary one-on-one consultation with Legacy Law Centers here.