You may be a millennial with a rising career and a growing family, or you may be approaching the end of your working life and anticipating retirement.
No matter your age or circumstances now is the time to plan for the future and you want everything to go smoothly. To that end, here are five estate planning mistakes and tips for avoiding them.
1. Neglecting to plan for minor children
Your will should be the centerpiece of your estate planning documents. Here is where you provide instructions for the distribution of your assets. Here, too, is where you designate a guardian for minor children in the event of your death. You can state how to use funds for their care. Having a life insurance policy will provide the necessary funds for their support.
2. Ignoring disability issues
You could face some sort of disability as you age. Look into long-term care insurance as soon as you can since the price of coverage continues to increase.
3. Disregarding the need for liquidity
Keep in mind that your assets will be split among your beneficiaries when you die, thus the need for liquidity. Once again, life insurance can provide the estate liquidity you want.
4. Forgetting about the impact of taxes
Unintentional income taxes can accompany certain types of assets that you leave to your heirs such as IRAs and 401(k)s. You can make a difference by converting a traditional IRA to a Roth IRA during your lifetime allowing your beneficiaries to avoid taxes when they withdraw funds.
5. Failing to update
People make the mistake of creating their estate planning documents, tucking them away and forgetting about them. Major changes happen in life, and you should schedule an appointment with your attorney every three to five years to update your documents.