Estate plans are meant to protect you and your assets while setting up instructions for who is going to get what after you pass away. Before you get things set up, you must consider your goals and the options available to make them happen.
As you’re working through it all, ensure that you haven’t made mistakes that could be damaging to you or your beneficiaries. Even though some of these might seem minor, they can be very costly.
Mistake 1: Adding children as co-owners
You might be tempted to add your children as co-owners of your assets, but this can lead to financial ruin for you if your children ever get into debt. If they don’t pay for their debts and creditors file for liens, there is a chance that they will find that the debtor is the co-owner of the assets. They can then seize those assets, which means your hard work was for nothing. One option that you have for this is to use trusts to transfer assets. Using irrevocable trusts can provide protection from your creditors and your heirs’ creditors until the assets are transferred after your death.
Mistake 2: Failing to update beneficiaries
You can’t just forget about your estate plan once it is created. You have to review it periodically so that you can ensure it still reflects your wishes. Major life changes like divorce, marriage, births and deaths can all necessitate updates to your estate plan. When you check this plan, make sure that you review the payable on death designations on other assets, such as bank, investment and life insurance accounts to verify that they are still accurate.
Mistake 3: Procrastinating on the creation or updates
More than half of Americans don’t have a will in place, and only around 36% of parents who have minor children have plans in place for the end of their life. Procrastination when it comes to creating the estate plan is a huge mistake because you might pass away or become incapacitated before you get it done.
Working closely with someone who is familiar with the estate planning process can help to ensure your wishes are accurately relayed. Be sure to check periodically in case you have to modify it due to changes in circumstance. You may experience increased peace when everything is set up.