A properly written estate plan can give you peace of mind knowing that your loved ones, assets and interests will be protected after your passing. But, your estate plan can also be a fertile ground for potentially costly mistakes.
Whether due to improper planning or oversight, estate planning missteps can greatly frustrate your intent and scuttle the financial legacy you hoped on leaving behind. That being said, here are some of the most common estate planning mistakes you need to avoid at all costs.
Failing to have an estate plan
This, by far, is the most common estate planning mistake. People avoid setting up estate plans for all kinds of reasons, including the fear of its complexity, the myth that an estate plan is the reserve of the rich and famous and the reluctance to accept the inevitability of death. However, the truth is estate planning comes with several benefits.
Failing to update the estate plan you do have
In a perfect world, you will want your family, friends and a couple of charities to inherit your assets when you pass on.
Unfortunately, life is far from perfect. It is not unusual for life to be riddled with estranged children, ex-spouses and ex-friends. In other words, the people you enlist as your beneficiaries when you first wrote your estate plan may no longer be the same folks you want to inherit your assets in the future. It is important that you review and update your estate plan when the following life events happen:
- A marriage
- Birth of a child
- Death of a beneficiary
Estate planning is one of the most overlooked steps when creating a financial plan. Most folks do not love thinking about their own death or discussing the fate of their estate when they pass on. However, prudent estate planning is a crucial step in ensuring that your assets will be distributed according to your wishes when you are no longer around to make crucial decisions.