Mistakes to avoid when creating an estate plan
Estate planning is an important part of financial management. Having an estate plan in place means you can have confidence your assets will be distributed based on your wishes after you pass away. However, many people make mistakes during the estate planning process that can lead to complications and unintended consequences.
Some of the most common mistakes that you’ll want to avoid when estate planning are detailed below.
One of the biggest mistakes people make is procrastinating when it comes to estate planning. It’s easy to put off creating a will or establishing a trust, but failing to do so can leave your family in a difficult situation if something unexpected happens. Start the estate planning process early to ensure your wishes are documented and legally binding.
Not updating documents
When your life changes, so should your estate plan. Failing to update your will, trust or other estate planning documents after significant life events, such as marriage, divorce, birth or death, can lead to complications and disputes. Regularly review and update your estate plan to ensure it remains relevant.
DIY estate planning
While do-it-yourself (DIY) solutions are appealing for some tasks, estate planning is not one of them. Using generic templates or online services may lead to errors in your documents that can render them invalid or result in unintended consequences. Consult with an experienced estate planning attorney to better ensure that your plan is legally sound and tailored to your specific needs.
Neglecting beneficiary designations
Certain assets, such as retirement accounts and life insurance policies, allow you to designate beneficiaries directly. Failing to update these beneficiary designations or not designating them at all can lead to assets passing to unintended recipients, bypassing the wishes detailed in your estate plan.
Avoiding these common mistakes is essential for a smooth and effective estate planning process. Working with professionals and staying proactive in managing your estate plan can help ensure your assets are distributed according to your wishes.