When it comes time to plan your estate to pass on to others, you need to make sure there are no mistakes. For example, if the person you plan to leave your estate to dies before you do, that’s a problem if you don’t update your estate plan. And never count on someone dying before you. At the time of planning your estate you can’t predict what the future will bring. With that said, there are five common mistakes that people make when planning their estate. Read on to learn what they are and how you can avoid them.
1. Not Updating the Beneficiary Form
There are a million scenarios that can take place in the future. You never know when there could be a death in the family, a birth, a marriage, a divorce, and so on that will require you to update your beneficiary forms. These include form for IRAs, retirement plans, annuities and life insurance policies. If you fail to update these, your estate could fall into the wrong hands or there could be a lengthily court battle over your estate. Keep in mind that it is also wise to name an alternative beneficiary in the event that you and the first one die at the same time. You never know.
2. Choosing the Wrong Person to Execute Your Estate Plan
The person who implements your estate plan should be someone who will keep your desires during the process instead of being influenced by their own agenda. This person should be detail oriented, neutral, and someone you can trust explicitly. Most people turn to a law office or group of other professionals to carry out this task.
3. Selecting the Wrong Person for Power of Attorney
If you become unable to make financial decisions due to illness or diminished mental capacity, you will want to have someone you trust making these decisions for you. The wrong person could cause problems within the family. Choose someone who can carry out your wishes regardless of the wishes of others.
4. Keeping Your Estate Plans Top Secret
The anticipation of not knowing a family member’s estate plan could cause problems. That’s why it is important to share your estate plan with family members before you pass away. This takes out the element of wonder as well as the element of surprise. We don’t recommend you share copies of you plan, but we do recommend talking to all of your family members so they know what to expect at your passing. This is also a good time to introduce the executor of your estate plan if he or she is not a family member.
5. Not Updating Your Estate Plan
If you do not update your estate plan on time, the results can be devastating for your family. If there is a change in tax law, a considerable change in your net worth, a divorce, or other life event you need to update your estate plan to account for this. Failing to update your plan could bring your estate to probate court, which could be quite lengthy and expensive. For this reason, it is important to meet with your estate planning attorney on a regular basis.
For your estate plan needs, contact Dana Law Group today.