We’ve heard how essential estate planning ensures that your hard-earned assets go to your loved ones, but we don’t often consider how mistakes can dramatically affect the outcome of your will or trust. Inadequate estate planning can result in your assets being tied up in court for years, costing thousands of dollars in taxes and legal fees, or being left to people you don't know or like.
We’ve listed the six common estate planning mistakes and how to avoid them, to create a comprehensive estate plan that will provide total protection for you and your loved ones.
1. Not Having An Estate Plan
The most obvious mistake is failing to draw up a will or any other form of the estate planning document. Dying without a will results in the court conducting the probate process, often leading to choices you might not necessarily like.
This lack of planning can also delay settlement, meaning that if you have heirs relying on your estate for funds, they may be hanging in financial limbo for years after your death. Rather than allowing the state to make decisions for you, create a will. Our estate planning team will be with you every step of the way.
2. Failing To Remove Beneficiaries
Most married couples name one another as the beneficiary and executor of their estates upon their deaths, but they forget to update their documents if the marriage ends in divorce. Eliminating a former spouse as a beneficiary and fiduciary (personal representative, trustee, or agent to act on your behalf) clarifies your intentions and best serves your wishes. It makes certain that your former spouse does not benefit from your estate at the expense of your intended beneficiaries after your death.
It’s essential to remove your former spouse from financial and medical power of attorney and update your estate plan immediately after the breakup to reflect your current wishes.
3. Failing To Add Beneficiaries
Use life-changing events to remind you to review and update your estate planning documents and beneficiaries. For instance, failing to add your newborn children to your will means they may lose out on their inheritance, which will instead go to your other beneficiaries Or your closest family member if you are childless and without a partner.
Though we can never predict when life-changing events will take place, it’s our job to work together and forecast how your situation and the law may change in the coming years or decades. As a result, most estate planning documents are written to account for future descendants. However, it’s ultimately your responsibility to update your estate plan after a significant life event.
4. Hiding Your Estate Plan
Common advice says to put your will in a safe place. Unfortunately, many people interpret this to mean that they should hide the will completely from the world, which can be disastrous if no one can find the document after your death.
In addition to the copy your estate planning attorney has in their records, it’s good practice to make another copy and give it to your Power of Attorney or named executor. They are the ones who will be responsible for managing your estate after your passing.
5. Not Putting Everything In Writing
When it comes to wills and trusts, only written documents are binding. Don’t rely on verbal promises. If you want to keep your word, make sure to amend your will regularly to meet your current desires. If you don’t have the time to spend with an estate planning attorney, write down the new promise on a separate document with several witnesses and work with a notary public to formally notarize the document. Then make sure to store it with all your other documents and let your estate planning lawyer know about the change.
6. Failing To Fund A Trust
When used properly, a trust is an excellent estate planning tool. However, establishing a trust is not sufficient; you must also use the trust as intended. For instance, if you create a revocable living trust to transfer your wealth to your children and spouse after your death but do not fund it, your entire estate will remain outside the trust and might go to people you did not intend.
Failing to use a trust as intended is as bad as not establishing a trust in the first place. Make sure to register your assets in the trust’s name to gain maximum benefits from the tool.
Carolina Family Estate Planning: We Help Families Build Better Lives By Planning For A Secure Future
Carolina Family Estate Planning has helped thousands of residents take control of their future with our estate planning and long-term care solutions, and we can do the same for you.
Our team will sit down with you to develop a comprehensive estate plan that is tailored to your situation.
There’s no need to wait to get your estate plan in order.
To find out more or schedule a FREE needs assessment call, call us at (919) 443-3035 or fill out our contact form today. We look forward to helping you get your ducks in a row and getting started on achieving peace of mind and security for your future.
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