Estate planning is a highly specialized and complex area of the law that comes with many potential pitfalls. More often than not, individuals who’ve been successful financially throughout their lives make mistakes when it comes to distributing their precious assets.
Here are some of the most common estate planning mistakes you should avoid:
1. Failing to Leave Your Living Trust Funded
Your living trust is a vehicle that enables you to pass on your assets without probate. But if your assets are not in the living trust, then what’s there to pass on? You must retitle your assets into your trust’s name or your trust will be useless.
2. Leaving your Assets to Your Beneficiaries Outright
When you do this, you expose the assets to divorcing spouses, creditors, and similar predators. It is best to leave your assets in a trust to ensure that they’re protected from creditors and potential lawsuits.
3. Failing to Create a Living Will
Some individuals think that they won’t need a living will because they already have a living trust. But take note that a living will is different since it specifically contains particular guidelines for your health care and the distribution of wealth, explains an experienced estate planning attorney in Utah.
4. Failing to Communicate with Your Beneficiaries and Trustees
It’s important that all the people included your estate plan know that they’re beneficiaries or trustees to make sure everything will go on smoothly when it comes time to settle your estate.
5. Failing to Account for Everything
A scattered, disorganized, and secret estate plan might result in some assets becoming lost or left undistributed and uncollected.
6. Failing to Update Your Estate Plan
Note that the Congress passes several new estate planning and tax laws every year, along with modified regulations. All these could directly affect your estate plan and lead to hefty tax consequences to your beneficiaries if you’re not careful.
Simply put, an estate that’s poorly planned could result in hardship for your loved ones and family members when you pass away. Understanding and taking the necessary steps to avoid these mistakes is a way to ensure that all your wishes would be honored and your beneficiaries will save money on probate fees and taxes.