Biggest Mistakes to Avoid When Estate Planning

Biggest Mistakes to Avoid When Estate Planning

Most Americans imagine rich people with tremendous amounts of cash and assets dividing their resources among loved ones when they think of “estate planning.” The reality is much more practical. Almost everyone owns at least one thing of value such as a home, a car, a bank account, or other valuable items. Everyone should prepare for their final days, and planning an estate is one of the best options for doing so. Below are some of the biggest mistakes to avoid when it comes to planning your estate.

Estate Planning is Complex – Beware of these Mistakes:

Having No Plan at All

The worst mistake you can make with your estate is not having one. Having an estate plan will ensure your property and assets go where you want them to go, no matter how limited your estate may seem.

No Updates to Your Estate Plan

Life can change in a heartbeat. If you already have an estate, it’s crucial that you regularly check it for changes to make. If you inherit property, have unexpected financial success, or invest in more assets, you need to make sure your estate reflects these changes.

Failing to Plan for Failing Health

End-of-life care, assisted living communities, and nursing home cost quite a lot of money. Many people will plan an estate but fail to account for their late-in-life expenses. Make sure you set money aside for your retirement and any medical expenses you expect in your golden years.

No Gifts

When you include gifts in your estate plan you can reduce the tax impact on your estate. The IRS allows you to bestow up to $14,000 a year per spouse in your estate, and these amounts do not factor into estate taxes. Specifying gifts allows you to make a more positive impact on specific individuals with your estate and leaves more money in the estate for distribution.

Your Children’s Names on Deeds

Create an estate plan that passes on your home as an inheritance instead of putting your children’s names on the deed. When you put your children’s names on the deed, you are essentially giving them a large, taxable gift.

Choosing the Wrong Advisor

Make sure you work with a reputable and trustworthy financial advisor for your estate planning. You should also connect with an attorney who has experience with estates law to ensure your estate is legal, viable, and contains all the information you need.

Choosing the Wrong Executor

You will need to name an executor of your estate when you create it. The executor or executors you select will be responsible for disbursing your estate as you specify and acting on your behalf after your death. You may think trusting a spouse or child with this responsibility is perfectly safe. It’s vital, however, to choose executors who can handle this difficult task and who you trust to abide by your wishes.

Waiting Too Long

Thinking about the end of your life may seem a long way away, but, the reality is, no one’s future is certain. The longer you procrastinate in making your estate, the greater the risk of you dying without securing your loved ones’ claims to your assets.

If you are concerned about estate planning, reaching out to a trustworthy investment professional or estates attorney is a great starting point. These individuals will help you navigate the complex tax implications your estate will include and help you make savvy decisions with your planning.