Estate planning refers to the process of ensuring an individual’s assets are distributed according to their intention. It is a comprehensive undertaking that enables you to have a hand in handling your legacy and protecting your loved ones when you are no longer around.
As important as it is, establishing a robust estate plan can be a complex process plagued by pitfalls you can easily fall into. Here are some of the most common mistakes that can significantly impact the success rate of your estate plan.
Failing to take taxes into account
A beneficiary facing unexpected financial burdens upon the death of a loved one is not a rare occurrence in estate planning. Some tend to forget the significant impact of taxes on the inheritance they plan to leave behind. Establishing strategies such as trusts, charitable donations and life insurance policies can help minimize taxes and ensure your estate has enough liquidity to cover final expenses.
Choosing the wrong executor or trustee
The executor of your estate will ensure that your hard-earned wealth is administered according to your wishes. Selecting the person who will handle this affair is one of the most crucial decisions you will make in estate planning, as any issue could lead to delays and complications in the administration process.
It is not mandatory to appoint a family member for these vital positions. You may reach out to an estate planning attorney to explore alternative choices.
Not updating beneficiary designations
Updating beneficiary designations is critical to ensure your assets will not go to someone you no longer wish to benefit. This is why it is vital to revisit your beneficiary designations after major life events, like divorce or the birth of a child, to ensure that they reflect your current intentions.
It is crucial to recognize that estate planning is not a one-time task but a comprehensive and ongoing process that needs to adapt along with the changes in your life. Consulting with an estate planning attorney can help you navigate this essential legal process.
