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 beneficiaries or failing to review your beneficiaries often enough could subject your estate to probate, creditors and delays.
Forgetting to change 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.
Leaving assets directly to a minor without addressing guardianship issues
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.
Ownership mistakes and imbalances
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
There are a multitude of things that 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.
Not dealing with your own mortality
Don’t leave your family ruined because you don’t want to admit to yourself that you are going to die someday. Don’t make matters worse by failing to plan.
Not updating your will
Many changes take place within a family or business structure. Ensure the assets you leave behind are given to the people you intended to have them. Revisit your will every few years.
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’re unable to 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.