There are many myths and misconceptions about estate planning. In this article, we’ll discuss the top common mistakes and how to avoid them, which will help your family save thousands of dollars in unnecessary taxes and probate fees:
Not naming your beneficiary
Failure to name your beneficiary could subject your estate to probate, creditors and delays.
Outdated wills and trusts
Revisit your will or trust every few years. Many changes take place within a family or business structure. Ensure the assets you leave behind are given to the people you intend to have them.
Leaving assets directly to a minor without appointing guardianship
Who will handle a child’s inheritance? The phrase “for their benefit” welcomes a whole host of potentially abusive interpretations. Make sure to address this in your estate plans to avoid any misinterpretations.
Lack of proper records
You ought to keep thorough records. If you don’t, your Executor or Trustee may miss out on assets, be left with unpaid liabilities, and have more work to complete. Additionally, it might require extra time from your probate lawyer, which would cost more money for your family.
If too many assets are in one spouse’s name, it could wreak havoc when it comes to tax planning. One spouse could have a much larger IRA and own a vacation house in his or her name only. By shifting the house or investment to the other spouse, the estate becomes more equalized, possibly reducing taxes.
Not having a residuary clause
A residuary clause covers items not named in a will or included in a trust, typically including items you don’t yet own but will before your death. Sometimes there are things you might not even know you own.
Not planning for the unexpected
Many things can happen, such as a sudden decline in your spouse’s health or a change in your assets. You can address this by having assets go to a trust. You can control how, to whom and when money gets distributed.
Improper planning for your death
Appropriate planning for the inevitable is vital. It’s important to have a financial Power of Attorney, an Appointment of Health Care Representative and a Living Will to avoid leaving your finances and assets in disarray.
Forgetting to remove an ex-spouse on an IRA
Many people aren’t aware that when you remarry, your new spouse becomes your beneficiary on the day you get married, but not in an IRA. This can have disastrous consequences for your new spouse and family.
Not planning for disability
An unexpected long-term disability can affect your personal and financial affairs in many different ways. Decisions like who will handle your finances, who will raise your children or make health care decisions on your behalf are essential. It may be necessary to appoint a power of attorney or create a living trust to work on your behalf if you cannot do it for yourself.
Chances are, you already know you can benefit from having an estate plan. Not only can it help maximize the actual value of the estate you pass on to your heirs and beneficiaries, but you’ll also have an opportunity to make informed decisions concerning how your assets should be handled while you are still alive.
We can help you put together a clean and concise estate plan. Contact Chuck Bendig today.