Many people mistakenly think that estate planning is only for the elite. Even if you have few assets, you need to create an estate plan. Period. Creating a good estate plan is one of the most effective ways to ensure your loved ones are cared for.
It is advisable to be very careful when creating your estate plan. Make sure your estate plan reflects your current and future wishes. It must contain necessary information related to your will, beneficiary designations, and guardianship designations.
Here are some common estate planning mistakes to avoid.
Not Having a Plan
If a person dies without an estate plan, their assets are distributed according to the state laws. More often than not, this distribution may not reflect the person’s wishes. In many cases, the beneficiaries (or the person’s dependents) get a small share.
In the case of minor beneficiaries, the court controls the inheritance until they reach legal age. If you think you do not need an estate plan, ask yourself this crucial question – Would you want the state to take important decisions related to your estate if you become mentally or physically incapacitated or after your death?
Not Updating Plans Regularly
Estate planning is an ongoing process, not a one-time exercise. Update your plan whenever public policies (such as a change in tax rates) that impact your estate change or when your goals shift. Watch out for changes at the state or federal government level.
Talk to an estate planning attorney near you about how significant events such as the birth of a new family member or divorce or death of a spouse can impact estate planning.
Failure to Plan for Disability/Incapacity
Life is uncertain. While you should keep a positive attitude, you cannot completely rule out the chances of an accident or old age rendering you incapacitated. It is estimated that around 70 percent of senior citizens will need long-term care before the end of their lives.
If a person without an estate plan becomes incapacitated, the court, and not their family members, decide how their assets must be used to provide for their care.
To prevent this from happening (if you, unfortunately, become mentally or physically incapacitated), appoint a person to make healthcare decisions on your behalf. Create a living trust. To ensure you have enough money to fund long-term care, buy short-term and long-term disability insurance.
Not Taking Step to Secure the Future of Minor Children
If a person dies without appointing a legal guardian for their minor children, the court may step in. It will name someone to raise them and hold and manage their inheritance until they reach the age of majority.
To protect your child’s future, build a protective trust into your trust, or create a Retirement Proctor Trust that will provide a lifetime of income to your kids.
Do you want to create an estate plan but do not know how to start? Let experts at Johnston Thomas Law show you the way. No matter your age, gender, and income level, we will create a plan customized to your needs. To talk to an estate planning attorney near you, call us at 707-545-6542.