Your estate consists of the assets that you will pass on to your beneficiaries when you pass away. Estate planning means deciding where your assets will go when you die. It takes time, thought, and the knowledgeable assistance of a qualified attorney.
Even if you diligently plan your estate on your own, it is easy to make mistakes. Mistakes can result in portions of your estate being unnecessarily taxed and assets going to the wrong beneficiaries.
We have compiled a list of some of the most common mistakes individuals make in estate planning. Please review the list, but also plan to meet with a qualified attorney to review your unique estate.
Failure to Prepare
One of the most common mistakes people make when it comes to their estate is that they simply fail to prepare a plan. Many people, especially the young and healthy, never even set up a Living Will. Living Wills are important to have at any age because they serve as a directive in the event that you become incapacitated. Even though far fewer young people plan their estates, more than twice as many 20-somethings die in car accidents than 60-somethings. Therefore, it is crucial that you plan your estate regardless of your age, health, or income level.
Choose your Beneficiaries
Your beneficiaries are those individuals who will inherit your estate when you die. It is important that you carefully consider and name your beneficiaries. Choose the appropriate individuals for the estate you will be leaving behind.
Many times, beneficiaries are children and spouses. However, if you have young children, you may not feel comfortable setting up your estate so that they inherit a large sum of money directly. How will they spend it? Are you sure that they would make wise choices?
If you would like to have more control over the estate after you die, then it is important that you set up a Trust for your beneficiaries. By establishing a Trust, you can allocate a certain portion of your estate towards a child’s education, first home, or other purpose of your choosing. Consult with a qualified attorney for more information about how to set up your estate for your beneficiaries.
Choose your Agent
Central to estate planning is choosing people to make decisions for you both during incapacity and after your death. These people include trustees, guardians, agents, and beneficiaries. Make sure that you select an agent who knows you and your wishes well. He or she will speak for you when you cannot, so it is vitally important that he or she knows you well. Make sure you and the agent have a clear understanding of his or her role in your estate and that you have clearly communicated your desires.
A significant portion of your assets might be vulnerable to estate taxes after you die. However, there are ways to leave behind an estate without losing most of it to taxes. It is important that you consult with a qualified attorney to discuss the most strategic methods for establishing your unique plan. A well-crafted plan will ensure that your beneficiaries get the most benefit from your years of hard work.
Review your Estate
Because life events, such as divorce, loss of job, etc., may change your assets, it is important to periodically revisit your plan to ensure that it is always current. Many people die without reviewing their assets, so their plans cannot be carried out as they had desired. By regularly reviewing your plan, you are able to help your beneficiaries inherit the assets you leave behind for them without having to fight for them in court or with other beneficiaries.