Are you part of the 58% of Americans who don’t have a will?
While thinking about and planning for what happens after you die can be uncomfortable, it’s important not to put off estate planning.
However, you want to make sure you do it carefully, so you don’t make estate planning mistakes that could complicate matters for your loved ones after you pass away.
So, how can you make sure you do all the right things when writing a will and planning what happens after you die?
Keep reading for an overview of 8 common estate planning mistakes, and how to avoid making them.
1. Putting It Off
The number one mistaking you can make in terms of estate planning is simply avoiding it.
If you pass away before you put together a plan for what happens to your assets, you’ll be leaving your family to deal with a significant amount of emotional strain. And that’s on top of the emotional toll of grief following a death.
If you don’t think you need to bother with estate planning because you just assume that your assets will be left to your spouse or children, that’s not always the case.
Laws vary per state if you die without a will, so the best thing to do is to make it very clear what you want to happen after you die, and get it in writing.
2. Not Setting Beneficiaries Correctly
As part of the estate planning process, you’ll need to set beneficiary designations on all relevant policies. This includes things like retirement plans, life insurance policies, military pensions, etc.
However, choosing a beneficiary is just the first step. You’ll also need to set an alternate beneficiary, should your primary beneficiary die before you do.
And, you can’t forget to update your beneficiaries as your life circumstances change over the years. For example, if your spouse is your primary beneficiary, and you get divorced, you may want to set a new beneficiary.
Or, if your parent is an alternate beneficiary and they pass away, you’ll need to adjust your estate plan accordingly.
3. Not Signing a Health-Care Directive
An unfortunate part of the estate planning process is thinking in terms of worst-case scenarios.
For example, what happens if you suffer a severe medical emergency and you cannot make decisions for yourself?
If you don’t have a signed health-care directive in your estate planning documents, your loved ones are left to make difficult decisions about life support, organ donation, and more.
By making your wishes clear for what you want to happen in the event of a medical emergency, things will be much easier for your family.
4. Ignoring Tax-Saving Opportunities
Some clients can take advantage of several tax-saving opportunities to help lessen the impact of any estate taxes that might be due after passing.
In your estate plans, classify certain items as gifts, whether to groups, businesses, or individuals. Qualifying gifts, up to $15,000, can be excluded from estate taxes.
Another way to save on estate taxes is to use the federal exemption option for each spouse.
The surviving spouse can pass their deceased spouse’s unused federal exemption to themselves, essentially doubling the exemption amount for which they qualify.
However, you must make sure you do everything regarding taxes in compliance with the law. Work with an estate planning attorney to ensure that you do everything correctly.
5. Not Planning for the Unexpected
When creating estate plans, you must think about and plan for all unexpected situations. You’ll want to name powers of attorney, should something happen to you where you can no longer make decisions for yourself.
If you have young children, the last thing you want to think about is missing out on a lifetime together. However, it’s better to be safe than sorry, by choosing a legal guardian should something happen to you and your spouse.
You never know what might happen in your life, so it’s best to include plans for all scenarios when estate planning.
6. Taking a Set It and Forget It Approach
If you’ve already done your estate planning, that’s great! However, the work doesn’t end there.
Estate planning is not a one-time-only event. As your life changes, your estate plans should change along with it.
For example, your plans will likely change as your family changes, whether in the form of marriage, divorce, remarriage, or having children.
Similarly, if you move to a new state, there may be laws that impact your estate plans that weren’t in place in your old state.
It’s a good idea to revisit your estate plans once a year or so, to verify everything is up to date.
7. Picking the Wrong Person
Choosing a personal representative for your estate is an important decision. You want to make sure you don’t select someone who could have ulterior motives.
When making a decision on who should be your personal representative, try to think about someone who is good at making decisions emotionally and someone who is reliable.
You should also choose someone who is in good financial standing and who can handle the responsibility that comes along with being a personal representative.
Once you’ve made a decision make sure to talk it over with the person you choose to make sure they are comfortable with your decision.
8. Not Working With Professionals
You don’t want to take any chances when it comes to planning your estate and preparing your will.
Hire an attorney who specializes in estate planning to make sure nothing is overlooked. This helps to ensure that your wishes are documented correctly and there will be a lower likelihood of complications when you pass away.
Talking to a financial planner and tax professional can also help you when estate planning.
We Can Help You Avoid Estate Planning Mistakes
Our lawyers at Watertown Law are here to help you avoid all the estate planning mistakes listed above.
You can’t afford to put off your plans any longer. Reach out to our team today to take the first step in making the right preparations.