Creating an estate plan can be an intimidating process. You may not understand how estate planning works because of widespread misconceptions and myths. Without the right advice and knowledge, you can make mistakes that result in financial and legal issues.
When you make an estate plan, you must make sure you follow all the laws and make decisions that will benefit you and your heirs the most. Here are a few mistakes you should avoid during the estate planning process.
1. Having a narrow plan
One common misconception is that estate planning only involves who receives your assets when you pass. While this is a vital aspect of estate planning, it is not the whole picture. Having a will is wonderful and necessary, but you should also consider when you need to expand your approach. Estate planning provides you with the ability to decide who will manage your finances or make medical decisions if you become incapacitated. Make sure you consider creating a living will, power of attorney and health care proxy.
2. Failing to review and update your plan
Estate planning is best when it is an ongoing process. When you sign a will or designate a power of attorney, that should not be the last decision you make regarding that specific issue. You should periodically review all aspects of your plan and make changes when necessary. Making updates to your plan is especially crucial when significant changes in your life and family crop up, such as a marriage, divorce, death or birth.
3. Neglecting beneficiary designations
A will does not concern all your assets. In fact, beneficiary designations for certain assets overrule what is in your will. Assets you may have that come with beneficiary designation forms may include retirement accounts, life insurance and annuities. Make sure you name the right beneficiary on these forms.
Take note of these prevalent estate planning problems, so you do not make the same mistakes as others.