Estate planning is an important aspect of securing your family’s financial future and ensuring your assets get distributed according to your wishes.
However, many people make avoidable mistakes that can jeopardize their intentions.
Procrastinating
Did you know that only 46% of Americans have a will, much less a full estate plan? One of the most common mistakes in estate planning is procrastination. Many individuals delay creating a plan, thinking they have plenty of time. Unfortunately, life is unpredictable, and you should have a plan in place sooner rather than later. Begin by taking inventory of your assets and drafting a basic will to get the process started.
Neglecting to update your plan
Life changes, and so should your estate plan. Births, deaths, marriages and divorces can impact your decisions. Therefore, review your plan annually and after major life events to ensure it remains current and reflects your wishes.
Ignoring the importance of beneficiary designations
Some assets, such as life insurance policies and retirement accounts, allow you to designate beneficiaries. Overlooking or neglecting to update these designations can lead to unintended consequences. Confirm that your beneficiaries are up to date and align with your current wishes.
Underestimating the impact of taxes
Estate taxes can take a significant bite out of your assets if you have not planned properly. Research current tax laws and consider strategies to minimize the tax burden on your estate. Gifts, trusts and other financial tools can help optimize your plan and reduce the impact of taxes on your heirs.
Share your intentions and decisions with family members. Open communication can prevent misunderstandings and promote harmony during what can be a difficult time.