Top 5 Most Common Estate Planning Mistakes (And How to Avoid Them)
Establishing an estate plan is the best way to ensure that you and your loved ones will be provided for according to your wishes at the end of your life. Whether it’s preparing for end-of-life care or assigning beneficiaries, a comprehensive estate plan is the best way for you to rest easily knowing that your wishes will be carried out and that you’ll be sparing your family members the distress and conflict of trying to guess what you would have wanted, as well as the costs of going through probate.
When you create your estate plan, make sure to avoid these common mistakes to ensure everything unfolds according to your wishes.
- Procrastinating. It can feel like you have plenty of time, especially when you’re young and in good health, but we all know accidents can happen when you least expect them. The best thing you can do for yourself and your loved ones is set aside time to make a plan.
Some people think that wills or estate planning is only necessary for those with lots of property or large assets, but this is not the case. If you pass away intestate (meaning without a will), the responsibility of distributing your assets falls to the legal system, which may not reflect your wishes and could leave family members scrambling.
- Allowing your estate plan to become outdated. Update your plan regularly—any time you experience a major life change, whenever there’s a major shift in public policy, and every 3-5 years as your priorities may shift.
Births, deaths, divorces, and marriages in the family are all events that require a review and possibly an update of your plan. Moving between states should also trigger a review to make sure that different state laws and policies don’t negatively impact your plan.
Remember that your assets may gain or lose value over time, so reviewing your plan every few years regardless of life events is in your best interests.
- Failing to plan for long-term care. While many people plan posthumous arrangements, they fail to plan for the possibility of long-term care. Most Americans will need some form of long-term or disability care in their golden years and those services can be extremely expensive. An estate plan should account for the possibility of home health care or nursing home accommodations. This will ensure that you’re able to get quality care at the end of your life without placing the financial burden of that care on family members or loved ones.
- Not discussing your plans with family and friends. Every adult who is named in your will or trusts should be aware of their role and clear on your wishes. Making sure that everyone is on the same page about your intentions can help avoid conflict further down the line. Your beneficiaries should be well prepared for any responsibilities they’ll have and clear on who will need to do what. Establishing clarity can also help to avoid any infighting over your wishes, which could drag out settlement of your estate and create unnecessary distress.
- Not coordinating beneficiaries. Many people hold life insurance, retirement accounts, and annuities as their largest assets. Each of these accounts has its own beneficiary form – these forms are legally binding documents and must be kept up-to-date.
In the event you divorce and fail to change your account beneficiaries, your ex-spouse will still inherit these accounts upon your death, even if you have updated your will. Take time to go over your account beneficiaries and ensure that they are updated and coordinated with your will.
At Piscataqua Savings Bank, our Trust and Investment Department helps individuals and families achieve their long-term financial goals with specialized wealth management strategies for investment and retirement accounts. We also provide trust and estate administration by serving as a corporate trustee or executor for matters of probate. Contact our Trust and Investment Department by phone at (603) 430-2955 or email email@example.com
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