An estate plan allows you to provide instructions on what you want done with your assets when you pass away. You should ensure that you get this taken care of as soon as possible.
There are several components of an estate plan that you should consider. This includes writing out your will, establishing and funding trusts, naming guardians for your children and setting up power of attorney designations. As you’re creating an estate plan, be sure you avoid these mistakes.
Not creating an estate plan at all
One of the biggest mistakes you can make is avoiding the estate planning process. If you don’t create the estate plan, your assets are going to be distributed according to the intestate laws. This doesn’t take your wishes into account, so you won’t have any say in who gets what. Using a combination of your will and trusts can help you to get assets to your chosen beneficiaries.
Addressing assets in more than one place
Each asset you have should only be managed in one place in your estate plan. For example, if a bank account has a payable-on-death designation, you shouldn’t put it in your will or any trust. You also shouldn’t put anything that’s in a trust into your will or vice versa. Having assets in more than one place can be problematic if you change one place and not the other.
Failing to address end-of-life needs
While most people focus on their assets, your estate plan should also address your care if you become incapacitated. You should set up power of attorney designations for your health care and your finances. The person you name for each of these will make decisions on your behalf. You should also write out your advance directives, which outline what medical treatments you want and don’t want.
Making sure you have a comprehensive estate plan in place is crucial. Working with a legal representative who’s familiar with your wishes and the legal tools available may help you to discover options that make it easier for your loved ones to honor your wishes in the event of your incapacity or death.