Because everyone owns something of value, by varying degrees, it’s also true that everyone can benefit from creating an estate plan—from the simple last will to a living trust. An estate plan can help enhance the value of the assets to pass on to your beneficiaries and gives you an opportunity to decide how your assets should be handled while you are still alive. Estate planners provide expert guidance, answer questions you may have and follow through on plans should you die or become disabled. Here are five of the most common mistakes made in estate planning that are completely avoidable.
1. Not having an estate plan. The mistake tops the list of the most common mistakes in estate planning. To ensure that your financial and personal affairs are handled properly after death, give careful thought and planning for how you would like your assets distributed. Estate planning prepares a plan and establishes a protocol to follow based on your wishes.
2. Using an outdated will. Estate planning professionals advise reviewing your will every few years to ensure the estate plan reflects your wishes most accurately. Many changes take place in a short amount of time, so you want to be sure your assets are handled correctly.
3. Leaving out provisions in the event of disability. A long-term or unexpected disability can decimate your assets in a short time. Do not overlook assigning a trustee, for example, to handle your estate and manage healthcare decisions, raise your children and oversee your financial affairs if you cannot.
4. Putting your child on the deed. Instead of putting your child’s name on the house, create an estate plan that includes the home or its value as an inheritance to avoid giving your child a huge tax liability. While tax laws exempt gifts up to $13,000, anything given that exceeds that value is taxable.