Estate planning is the process of preparing for issues that may arise towards the end of your life and after your death. Having an estate plan will ensure that your wishes are carried out. A comprehensive estate plan will also save your loved ones money and make it easier for them to settle your estate following your death.
Estate planning is complicated, so it’s easy to make mistakes if you aren’t working with an experienced estate planning attorney. Unfortunately, these mistakes can lead to major headaches, confusion, and stress for your loved ones. Here are 5 common estate planning mistakes you need to avoid:
Mistake #1: Forgetting to Update Your Estate Planning Documents
Estate planning is an ongoing process. This is because your estate planning documents may need to be updated after significant events in your life, including:
- Birth of a child or grandchild
- Adoption of a child or grandchild
- A child or grandchild turning 18 years old
- Marriage or divorce
- Loved one’s death
- Major illness or disability
- Acquisition of new assets
- Receipt of large inheritance
Events like these could impact your estate plan. How? For example, say you create an estate plan to ensure your assets are transferred to your two children after your death. Then, you have another child after finalizing your estate plan. If you don’t update your documents, your assets will only go to the two children who are named in your estate plan. This is why it’s so important to review and update your estate plan on a regular basis.
Mistake #2: Choosing the Wrong Executor or Trustee
You will need to make a number of important decisions when creating an estate plan, but few are as important as choosing the right people to manage your estate.
An executor is responsible for paying taxes and debts, distributing assets, and settling your estate. A trustee, on the other hand, is responsible for managing the trust’s assets and distributing them to the correct beneficiaries.
The people you choose to serve as your executor and/or trustee need to be trustworthy, honest, and good with money. If you choose the wrong people for these roles, they could misuse your assets, steal from your beneficiaries, and fail to carry out your wishes.
Mistake #3: Omitting A Residuary Clause
Your estate plan should clearly outline how you want your assets to be distributed to your beneficiaries after your death. But what happens if you accidentally forget to address how certain assets will be distributed? Make sure these assets are distributed to the right people by including a residuary clause in your estate plan.
A residuary clause is a term that explains how assets that are not specifically addressed should be distributed. For example, say you create an estate plan that outlines how to distribute your home, vehicle, and cash after your death. You also include a residuary clause that states all remaining assets should go to your child. Adding this clause ensures that all assets besides your home, vehicle, and cash will go to your child even though they are not specifically mentioned in your estate plan.
Mistake #4: Not Properly Planning For Minor Children
Estate planning involves much more than simply deciding who gets what after your death. This process also involves putting a plan in place for your minor children to ensure they are cared for in the event of your death.
Make sure your estate plan addresses who you want to serve as the guardian of your minor children. The person you name will be responsible for raising your children, so make sure you choose someone who you can trust.
Naming a guardian is one of the most important aspects of an estate plan for parents. If you fail to name a guardian, the court has the authority to choose someone after your death. Don’t leave this decision up to a judge—make sure you get to choose who cares for your child by addressing this issue in your estate plan.
Mistake #5: Thinking You’re Too Young to Start Planning
Many people put estate planning on the backburner because they assume they’re too young to start thinking about what will happen after their death. Don’t make this mistake. Unexpected accidents and illnesses can affect people of all ages, so it’s never too early to start estate planning.
Seek Legal Representation From Our Estate Planning Attorneys
Planning an estate is not easy, which is why you shouldn’t attempt to create an estate plan on your own. Let the experienced estate planning attorneys at Beeman Heifner Benge P.A. create a personalized estate plan that meets your unique needs.