Any mistakes made in the estate planning process can be extremely costly if you do not catch them. Continue reading to learn the top 7 estate planning mistakes to avoid.
1. Not Partaking In Estate Planning
One of the costliest mistakes you can make is not setting up an estate plan. Sometimes people end up putting off an estate plan until it’s too late. While estate planning may seem like something to do once you’re retired, the key is estate planning at every stage of adulthood. Whether you’re in your 20s with few assets, or in your 50s preparing for retirement, you need to have an estate plan in place.
2. Forgetting To Name Power of Attorneys
Financial and medical Power of Attorneys are people you designate to step in to make decisions on your behalf in the event you are unable to. If you don’t have Power of Attorneys, your health and finances could be left in a bind. Before appointing your Power of Attorneys through documents in your estate plan, be sure to notify who you want in those positions, so they are prepared.
3. Not Updating Your Beneficiaries
You may have set up your accounts 20 years ago with a beneficiary that may not be applicable anymore. If you do not update your beneficiaries on your accounts, your assets may go to someone that you did not intend on. These important accounts include retirement accounts, insurance policies, annuities, bank accounts, and more. Even if you designated a different beneficiary in your will, beneficiary forms are legal documents that override what was written in your will. To prevent any issues, regularly check your beneficiaries and update as needed.
4. Improperly Leaving Assets To A Minor
When you are deciding on your estate plan, you may want to leave assets for your children or grandchild who are still minors. If you decide to leave assets directly to a minor, you need to handle any guardianship issues. The minor will not be able to handle those assets until they turn 18 so someone needs to manage the asset until that point. Also, be sure to designate rules for the guardian who is in charge of the assets. If you leave your will open-ended, the minor may not even see a piece of their inheritance.
5. Forgetting About Digital Assets
When you pass away, you lose your digital assets too. With how involved technology is in everyday life, you are bound to have digital assets somewhere. Some digital assets include email addresses, online banking accounts, social media accounts, and more. While Digital Estate Planning is relatively new, including it as part of your overall estate plan will allow you to lay out your wishes for how your digital assets should be handled after your passing.
6. Not Specifying Your Final Arrangements Wishes
After you pass away, your friends and family will be grieving. If you’d like to help make their grieving process easier, you can plan your funeral and burial arrangements in advance. In addition to this, you can also make your end-of-life wishes known. By writing out your wishes for the end of your life and how you want your life to be celebrated, you will be taking a large weight off your loved one’s shoulders by knowing they will honor you in the exact way you wanted.
7. Not Taking Taxes Into Account
If you do not properly set aside and plan for estate taxes, you’ll be leaving your beneficiaries to handle the taxes. While your estate will not be liable for estate taxes at the federal level unless you have a multi-million dollar estate, each state has its own estate taxation. It’s extremely important to understand how estate taxes will affect your estate and beneficiaries so you can plan to limit taxation.
Thoroughly planning your estate alone can be difficult. Instead, have an advisor from Mooney Lyons Wealth by your side. Our advisors will help guide you through the estate planning process and ensure you avoid these top estate planning mistakes. Schedule a consultation with us today to get started.