7 Estate Planning Mistakes You Should Avoid
Nov 16, 2021 03:57 PM EST
Estate planning is a critical step to protecting your assets, interests, and loved ones after you pass away. Nevertheless, this process is often marked with many missteps or wholly ignored, creating a ground for legal complications and family feuds in the future. To prevent these complications and added stress to your heirs, here are seven estate planning mistakes you should avoid.
Many people assume that estate planning is for the wealthy or think their last wills fully control asset distribution. This is a costly mistake that puts your financial future and legacy at great risk, as your family will have to go through expensive legal processes before dividing your assets. Your heirs will also have to bear with a lot of infighting and high tax liabilities that will leave them with little benefits.
Save your loved ones from grief by prioritizing working with an estate planning attorney in Huntsville, Alabama, to help guide you on this process and avoid nasty family breakups.
An estate plan needs to be actively updated to reflect changes in your net worth, assets, and beneficiaries. Your estate plan also needs to align with the latest federal and state laws governing this process and probate avoidance.
Your estate plan should include powers of attorney to ensure a trusted and capable individual manages your financial matters and medical care when you become incapacitated. These standalone documents are vital in many cases and should always be prioritized besides being regularly updated.
A common mistake most people make is poorly designating their asset ownership. Ensuring all assets are under correct ownership and beneficiaries is the best way to ensure your current estate plan is not obsolete or adds unnecessary complexities. Consult with your estate planning attorney for better guidance on managing co-owned assets, limited partnerships, and business assets to avoid passing liabilities to your heirs.
If you have young or disabled heirs, you will need a plan for managing and protecting your assets for their benefit. It is never too early to start protecting your beneficiaries, and some of the best practices include:
● Setting up a specially drafted trust for your children
● Having a life insurance policy
● Naming a custodian or trustee to manage your children's inheritance
You need to consider the tax ramifications of your decisions during estate planning, as these liabilities can put a huge dent in your plan. Keep in touch with the latest federal and state policies to know your limits and avoid leaving your heirs with a heavy tax burden.
It is one thing to set up a revocable trust and another to ensure it is funded. Do not ignore these crucial steps after creating a living trust to help avoid probate and make the most out of this excellent decision.
Always aim to have a well-thought-out estate plan by avoiding these costly mistakes and firmly securing the future of your loved ones.