7 Easy To Make Estate Planning Mistakes
Did you know?
Less than 50% of American Adults don't have a Will according to a study by LexisNexis.
This is scary because they would rather leave things up to strangers in courts rather than spend a few hours making the necessary preparations.
Mistake #1: I don't need an estate plan, I have no assets
Regardless of what you own, you still have yourself and your family to consider.
Think about these questions:
- What would happen if you were to suddenly die or become incapacitated?
- Who would make decisions for you?
- What would happen to your children if you and your spouse died at the same time?
Mistake #2: I don't need to worry about it because I'm still young
This is a mistake because you still need to consider your health and what would happen to your family if something unexpected were to happen to you.
What happens to your family if you're not there?
Do you have a plan in place?
Mistake #3: I just need a Will
You might be thinking that If you have a will, your family won’t have to go through probate (the legal process for when someone dies, for example: proving a will is valid, paying debts and so forth).
Even if you have a Will, your family will still need to submit it to be approved by a probate court judge.
A Will serves as a list of instructions of how you want your property to be distributed.
You can also use it to name a guardian for your children.
It is an important part of a complete estate plan, but shouldn’t be the only document you have.
For example, you will may also need a Power of Attorney (a document that allows someone else to make financial and other decisions for you), Living Trust, and Advanced Healthcare Directive (a document that specifies what types of treatment you do or don't want if you can't make your own decisions) .
Mistake #4: I have Power of Attorney for my parents. I can use it to administer their estate after they pass
Unfortunately, a Power of Attorney is only good during a person's lifetime. Once they are gone, you won't be able to do anything with a Power of Attorney.
Mistake #5: A Living Trust will protect my assets from creditors and avoid estate taxes.
Be careful about making sure you get the right legal documents for your needs.
Your assets won't be protected from creditors simply from being included in a Living Trust because you still have full control over the assets.
Also, a basic Living Trust will not save you from estate taxes. The main purpose of a Living Trust is to avoid the probate process.
Mistake #6: It's going to cost me a lot of money to set up an estate plan
This might be true if your situation is complicated. For most people can get it done for less than $1,000 by an attorney.
You can even create one yourself if you like.
Mistake #7: Once my estate plan is completed, I don't need to do anything else
Your life is constantly changing and your estate plan needs to reflect that.
Some important events to consider for reviewing your estate plan are:
- Grand Children
- Disability or other major life change
At the very least, look over your documents every few years and make changes if necessary.
If you have any other questions, please comment below or send me an email.