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This content is for informational purposes only and is not intended to provide legal or financial advice.
Estate plans can seem quite complicated, especially if you aren’t familiar with the legal aspects. Sadly, many procrastinate to the point where they don’t get to write an estate plan at all.
Others may attempt to do it without expert help and leave plenty of room for misunderstandings in their will. So, it is important to be prepared well in advance with proper guidance.
Here are 10 pitfalls you should avoid to keep your estate plan error-free and your heirs happy.
1. Not Planning Ahead
Not bothering about your estate plan is an obvious mistake.
If you don’t give it much thought or consider the things you should include or exclude, you cannot expect to create a good estate plan.
It’s not necessarily the need of the hour, but remember that unfortunate events are never planned.
The last thing you want is your possessions going to the wrong hands!
2. Not Communicating With Your Family
People often assign their assets to immediate family members. So, you should discuss your estate plan with your loved ones. It will prevent nasty disputes in the future.
If the circumstances offer no scope for such conversations, try to put the estate division clearly in writing.
3. Naming Only One Beneficiary
A well-drafted estate plan mentions more than one beneficiary.
Apart from mentioning the primary beneficiaries, you should include the contingent beneficiaries.
If the primary beneficiary passes away, the continent beneficiaries will receive your property.
4. Not Considering Taxes
Improper tax planning can deplete your estate funds. It translates into fewer assets for your beneficiaries.
Some common taxes include federal estate tax on property transfer, gift tax, and inheritance tax paid by the person who inherits your assets.
If you are unsure about tax planning, consider hiring a financial advisor to help you out.
5. Not Hiring a Professional
Planning your family’s future and what you leave behind for them involves several laws and regulations.
If you’re baffled and fail to do things right, you risk losing a huge chunk of your estate or passing it into the wrong heads.
Invest in a qualified Estate Planning Attorney to help you handle the process.
6. Not Considering Digital Assets
Today, it is not just property or money that can be transferred as your estate. Digital assets can also be part of your estate plan.
These include all your digital documents, pictures, social media accounts, and other important digital information.
If you own virtual currency, you can include it as well.
7. Not Updating the Details
Your estate plan is not set in stone. It is important to review it once every few years and update it to accommodate any life changes.
Some examples include the death of a family member, estranged relations, the birth of a child, or the accumulation of new assets.
8. Not Including Gifts
Including gifts to charities or organizations will be a way for you to give back to society. It also brings on several estate tax benefits.
They go up to several thousand dollars per year. So, talk to your lawyer and set aside some of your assets for this.
9. Including Unnecessary Things
While you should account for all the assets you own both digital and physical, you don’t have to mention every small thing in your estate plan.
For example, sports tickets, inexpensive gadgets, and other general items do not require a detailed distribution strategy.
10. Not Securing the Estate Plan
There’s no point in making a solid estate plan only to lose it. Keeping it in a safe place is as important as drafting it.
You can do this by locking it in a security deposit box. Store its copies with your estate planning attorney and other administrators.
Conclusion
If you have already drafted your estate plan, have a professional or your estate attorney review it before you finalize it.
Each state has specific estate tax laws. So, make sure you are thoroughly informed about your state laws and your plan complies with them.
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