When you think about creating your estate plan, your primary focus is probably to set out a road map for the distribution of your assets to your designated heirs when you pass on. When completed adequately, an estate plan can give you peace of mind knowing that your wishes will be honored, and that the wealth you have worked so hard to build will go to the right people when you die.
However, estate planning can be a complex and multifaceted undertaking. Here are common mistakes that can hurt your estate planning goals.
Failing to update your estate plan
An estate plan is a living document. Meaning, the content of your estate plan ought to change with corresponding changes in your circumstances. Here are life changes that should call for an update to your estate plan:
- Change in state and/or federal laws
- Change in your beneficiaries
- Change in your assets
Failing to update your estate plan can have serious implications such as prolonged and disputed probate or even complete invalidation of the document.
Failing to plan for incapacity
Most people tend to associate incapacitation with old age-related conditions like dementia and Alzheimer’s disease. While it is true that these conditions eventually lead to incapacitation, the truth of the matter is you can be incapacitated at any age. Have you ever thought of what will happen to you and your assets when you are incapacitated and, thus, unable to make important decisions? Well, this is where the power of attorney comes in. Without the healthcare and financial powers of attorney, the court may be compelled to make certain decisions on your behalf, and you may not like this.
Trying to do it yourself
An estate plan, as already mentioned, can be a complex undertaking. One of the worst mistakes you can make is to create one yourself or use some free template to create one. While you can create an estate plan on your own, it is prudent that you obtain appropriate knowledge and guidance. This will ensure that your estate plan is properly created and compliant with existing laws.
There are so many benefits that come with having an estate plan. However, to serve its intended purpose, be sure to steer clear of these common estate planning mistakes.