Estate Planning Basics: Avoid These Common Mistakes
If you don't have a documented estate plan, despite the protection it can provide, you're not alone. The Law Depot found that 73% of Americans do not have one. Some reasons cited include not having time or not knowing how to create one.
Can you relate? Or maybe you started the process but never finished. Regardless of the reason, it's not too late. Here are a few estate planning basics and common mistakes you should avoid.
Understanding the Essentials of Estate Planning
Some attorneys believe estate planning is an act of love because it can protect your family. It allows you to determine the distribution and management of your assets after death. In addition, it can include relevant information about your debts and even care of minor children.
Essential estate planning steps include:
- Assessing and documenting your assets and debt
- Preparing or updating your will
- Designating your beneficiaries
- Establishing a trust
- Creating a financial power of attorney and health care directive
- Developing an end-of-life plan that specifies your funeral arrangements
- Compiling important physical and digital documents
An estate attorney can assist in drafting the relevant documents you need. They can also provide information on Wisconsin's estate tax laws. You should store these and other supporting documents safely and inform your family.
Avoiding Common Estate Planning Mistakes
Some mistakes in estate planning can negate the necessary protection the process provides. These are a few common ones to avoid:
Not Having an Estate Plan at All
It's a common misconception that estate planning is only for the wealthy. Key estate planning documents help convey your wishes to your loved ones after death. Without them, a court decides who inherits your assets.
Not having an estate plan can also place undue stress on family members during a difficult time.
Not Updating Your Plan Regularly
Not updating your plan regularly could lead to uncertainty upon your death. An outdated plan may not reflect your current wishes or family situation, including:
- Marriage
- Divorce
- Birth of children
- Death of spouse
It could increase the likelihood of conflicts among family members. To secure future estate planning, update your plan regularly. Ensure you include new assets and life changes and that it considers evolving laws.
Failing to Fund Your Trust Properly
A living trust holds the assets your beneficiaries will eventually inherit. The assets must be properly retitled in the name of the trust.
If not, the transfer of assets will become necessary after your death. You could help your family avoid a long and costly legal process by working with your attorney to complete the transaction.
Naming Inappropriate Executors or Trustees
Funding your trust is an essential estate planning guide. Selecting appropriate trustees or executors is important as well.
Choose people you trust who are responsible, organized, and can handle these duties. You also have the option of naming a professional fiduciary.
Not Considering Incapacity Planning
Imagine not being able to make decisions. Unfortunately, it is a reality that some people face. One of the most important estate planning tips is planning for incapacity.
It allows you to prepare in the event you need to transition to assisted living. You have the opportunity to research and find a community that you will enjoy, and that will suit your needs. Your plan should include financial provisions or long-term-care insurance to pay for your stay.
When planning your estate, you can appoint someone to make your healthcare and financial decisions if you become incapacitated. Failing to do this can lead to court-supervised guardianships.
Improper Beneficiary Designations
The ability to choose who will handle your affairs after you die is a key benefit of estate planning. It's important to update your plan to reflect the advocates you want. Your plan should also include updated beneficiaries.
Ensure beneficiary forms for your life insurance policies, retirement accounts, and other assets are up-to-date and coordinate with your overall estate plan. However, you should avoid naming minors or incapacitated individuals directly as beneficiaries.
Failing to Plan for Blended Families
Improper beneficiary designations could occur if you have a blended family. Estate planning becomes critical when there are stepchildren involved. Ensure your plan provides for your current spouse and children while also considering your prior relationships.
It's best to consult an attorney to avoid unintended consequences and family conflicts.
Trying to Do It All Yourself
There are many legal documents, terms, and elements that can make the estate planning process overwhelming for non-legal minds. Complex tax issues are also involved.
Despite this, you may think a general knowledge of beginner's estate planning is enough. However, creating the relevant documents without legal advice can lead to errors and unwanted outcomes. An experienced estate planning attorney can ensure your plan is valid and accomplishes your goals.
Procrastinating or Avoiding the Process
Knowing estate planning basics can help make the process easier. However, this may not eliminate your discomfort when thinking about it.
Ironically, this uneasiness is minimal compared to the stress, costs, and family conflicts that can result if you fail to plan. The sooner you start the process, the more options you'll have to protect yourself and your loved ones.
Getting Estate Planning Basics Right
Knowing estate planning basics is the first step to protecting yourself and your family. However, working with an experienced attorney can help you avoid common mistakes during the process. Procrastinating, improper beneficiary designations, and lack of incapacity planning are a few.
A comprehensive, up-to-date estate plan conveys your wishes to your family after death. You can also stipulate your preferred care options if your health becomes compromised. It allows you to choose the most appropriate assisted living community while you still can.
Oak Gardens Place Assisted Living is a great community in Altoona, WI. Our individualized care plans and compassionate, well-trained staff ensure we meet the needs of each resident. You'll continue to experience an enhanced quality of life in our community with exceptional assisted living services and various activities and outings.
Schedule a tour for a firsthand experience of warmth and comfort in a home-like setting!