5 Most Common Estate Planning Mistakes
The whole point of estate planning is to provide peace of mind. If you want to ensure your assets and loved ones are protected after your death, an estate plan is the way to achieve those goals. It’s important, however, to choose a skilled estate planning attorney to guide you through the process to avoid making costly mistakes.
Improper planning, oversights, and missteps can and do happen when you try to handle estate planning matters on your own. In this article, we discuss the 5 most common estate planning mistakes and how they diminish your financial legacy.
Mistake #1: estate planning procrastination
No one likes to think about dying. Some people act like they’re going to live forever, so they don’t make estate planning a priority. People under 30 can be guilty of putting it off until it’s too late, with only 20 percent having some sort of estate plan in place.
Failure to start the estate planning process is the biggest mistake most people make. If you’re under 30 and have children, naming a legal guardian is a must unless you want to risk leaving that decision to the courts.
At a bare minimum, you need to have a will, a financial power of attorney, and a health care power of attorney. If you don’t know where to start with estate planning, these are crucial areas to address.
Mistake #2: outdated wills
The only thing worse than not having a will at all is letting yours become outdated. You should never set and forget your will. Who you may designate as a beneficiary when you’re young can change as you get older and your priorities – and relationships – change.
You should have an estate planning document review with your estate planning attorney every couple of years. Births, deaths, and divorces are just a few of the life moments that can impact an existing will. Maybe your assets have increased significantly, and you need to ensure they’re protected. Whatever the reason, period updates are the best way to ensure your wishes are met after your death.
Mistake #3: updating beneficiaries
If you’re working with an estate planning attorney who knows his stuff, this should never happen. However, it bears mentioning because sometimes oversights happen. Any time you change your will, make sure you update all beneficiaries for coordinating accounts, including:
- Annuities.
- IRAs and other retirement accounts.
- Life insurance policies.
Each of these has its own beneficiary forms process. When you update your estate plan, make sure it matches what’s on file for these accounts. Otherwise, the companies with which you have the accounts must follow what they have on their official records.
Mistake #4: assigning children as joint owners
One of your estate planning goals may be to make sure your children are financially protected after your death. Whether they are minors or adults at the time of your passing, you want to ensure their needs are met in your absence. Don’t make the mistake of thinking this means you must assign your children as joint owners of your assets.
Never, ever name your children as joint owners of your assets. Doing so allows their creditors access to your money. If your goal is to ensure your children are protected after your death, it’s critical you name someone else for this role. Instead, make your children the power of attorneys or designate them as payable-on-death beneficiaries to banks and brokerage accounts. Banks and brokerages allow children to access accounts without putting those assets in their names.
Mistake #5: failing to title your trust
Trusts help protect your assets from creditors. They are one of the best ways to ensure your estate is distributed the way you intended. Trusts also have the added benefit of keeping the details of your financial affairs away from prying eyes.
Failing to move assets into the account – cash, mutual funds, real estate, stocks – defeats the purpose of having a trust. For instance, if you buy a new property after you establish the trust, you’ll need to go back and add that property to the trust. Failure to do so means this asset must go through probate, which is an expensive and time-consuming process for your heirs.
Manage your wealth the right way
Working with an experienced estate planning attorney can help you avoid these and other costly mistakes when drafting the legal documents needed for honoring your final wishes. Get your free case review today from Scott Atkinson Law Firm. Scott has over 30 years of experience in estate planning. He’ll ensure you avoid making costly mistakes in your estate plan so you can have peace of mind.