Proper estate planning allows you to make informed decisions about the handling of your assets. Having a plan in place gives you and your loved ones peace of mind knowing that you had the opportunity to maximize the value of your estate and make the designations you wanted.
Knowing the common estate planning mistakes will help you avoid these issues in your legal affairs.
Not updating after major life events
Make sure to revise your estate planning documents after each major life event. For example, if you move to a new state, documents executed in your previous home state may not meet the new state law requirements.
Additionally, if you divorce your former spouse you should review your beneficiary designations since the end of your marriage will not automatically invalidate any gifts made under a life insurance plan or an IRA.
Other major moments that affect estate planning include remarriage, the death or marriage of a named beneficiary or separation from your spouse.
Naming minor children as direct beneficiaries
An appointed guardian holds property from an estate for to a minor as children less than 18 years old cannot receive assets directly from an estate. By designating in your will a custodian or trustee for any minor children you select as beneficiaries, you can save the time and expense of a court-appointed guardianship.
Not updating after new estate tax laws
As you work on your estate planning documents, make sure to consult with professionals who are familiar with the current tax laws. The estate tax exemption amount increased significantly over the past decade so people who completed their planning years ago need to assess whether their plans are as tax efficient as possible.