Estate planning is one of the most important parts of a person’s life, especially as you age. Having a certain level of organization over your estate is the key to protecting your family and legacy. When you finally decide to devote time to the process, there are several key missteps to steer clear of in the interest of preventing fees and poor estate management. Read on to learn about a few costly estate planning mistakes you’ll want to avoid.
Not Having a Will
One of the most fundamental and impactful estate planning omissions is the failure to draft a will. Without a will, the state decides where your assets go, which might not reflect your true intentions. This scenario can lead to family disputes, prolonged legal battles, and significant delays in asset distribution. A will allows you to leave possessions, properties, and money to specific loved ones and can simplify the process for your heirs. But it isn’t just enough to have a will; you need to make sure that it includes some commonly forgotten assets as well to truly be effective.
Neglecting To Update Beneficiary Designations
Life is always changing. Therefore, relationships evolve, families grow, and financial situations fluctuate. Because of this, it’s crucial to periodically review and update your beneficiary designations on life insurance policies and retirement accounts to ensure they align with your current wishes. Failing to do so could result in unintended individuals receiving assets you intended for others. Make it a practice to review beneficiaries after major life events, such as marriage, divorce, the birth of a child, or the death of a beneficiary.
Ignoring the Need for a Power of Attorney
Too often, individuals focus solely on asset distribution and neglect the possibility of incapacity before death. A durable power of attorney (POA) is a legal document that designates an individual to make financial decisions on your behalf if you become incapacitated. Without a POA, your family members might need to go to court to obtain guardianship over you, which is a costly and public process. Appoint someone you trust as your power of attorney for financial matters.
Failing To Plan for Incapacity
In a similar vein, planning for potential medical incapacity is a significant component of comprehensive estate planning. A living will or advance directive outlines your healthcare preferences and can ease the burden of decision-making on your loved ones. It’s important to discuss your wishes with your designee and healthcare providers. Planning for medical incapacity ensures that your interests and values remain respected, even if you are unable to communicate them.
Hiring the Wrong Estate Planning Solicitor
The most costly estate planning mistake to avoid is seeking advice from the wrong professional. A solicitor or advisor who doesn’t understand the nuances of estate law or who won’t prioritize your needs can lead to a plan that falls apart under scrutiny. Consider working with a specialist in estate planning rather than a general practice attorney. Look for referrals and interview potential representatives with a list of questions about estate planning and their related experience.
Never take the estate planning process lightly. While there are several pitfalls to navigate, your efforts in preserving your legacy will always be worth it. Take the time to plan thoughtfully, review your estate plan regularly, and consult with a qualified professional. Your future self—and your loved ones—will thank you.
