As a responsible adult, creating an estate plan makes sense. This plan, when established properly, will protect your loved ones and ensure your assets are distributed based on your wishes after you pass away.
Making an estate plan may seem simple; however, some mistakes can jeopardize these efforts. Knowing what these are will help you avoid them.
1. Not having property distribution instructions
Creating an estate plan aims to prevent arguments and hurt feelings among your loved ones. However, this will likely happen if you don’t outline how your property should be distributed after you die.
Leave specific instructions in your will and other documents about property distribution. If you don’t do this, family members may fight over your assets, which could result in expensive and time-consuming estate litigation.
2. Failing to update beneficiary designations
You may be married and have no children when you create your estate plan. It makes sense that all your assets would go to your spouse. However, if you divorce, remarry and have children, you must update your beneficiary designations.
It is also possible to set up contingent beneficiary designations if the named beneficiary dies before you or a charity that no longer operates when you pass.
3. Not taking advantage of the benefits offered by trusts
You can utilize trusts to avoid probate after you pass away. However, you must be specific if you plan to put your assets in a trust. Once the trust is created, make sure you take appropriate steps to transfer assets to the trust and keep it funded.
Creating an estate plan is responsible; however, it is not a “set-it-and-forget-it” document. Be sure to avoid the mistakes above and know your legal rights and options to ensure your estate plan works as you desire after you pass away.