Common Estate Planning Mistakes

Even though planning your estate isn't an enjoyable task, it is necessary in order to efficiently and successfully transfer your assets to those you care about when you're no longer around. With careful planning, your heirs can avoid a lengthy probate process and potentially even taxes on your assets, if any. Furthermore, a well-planned estate avoids confusion and potential conflict among loved ones.

Despite the advantages of estate planning, many people make mistakes in the process, and the first cardinal sin is not getting around to doing it at all! Make sure that you take the time to plan at least the financial portion of your estate to leave your loved ones behind with some security.

Here are the six common mistakes of estate planning that can cause inconvenience to family members upon a loved one's passing.

1. Don't fall into the trap of thinking that estate planning is just for the rich. This is entirely false, as planning your estate is essential for anyone with any amount of assets to leave behind. Many people don't realize that their estate is as large as it really is, especially when they fail to take into account the assets from their home.

2. Remember to update your will and review it at least once every two years. Factors that can change information about your beneficiaries include deaths, divorce, birth, and adoption. As your family structure changes, so do the assets you hold and who you want to leave them to.

3. This is applicable if you have dependents or assets overseas - Don't assume that taxes paid on your assets are set in stone. Talk to your financial planner or tax consultant about ways your beneficiaries can avoid paying taxes on your assets. There are several strategies for tax planning so that you can minimize taxes or avoid them altogether.

4. All your financial papers should be in order so that it's easy for someone to find them. Ensure at least one of your loved ones has information on where to find the documents necessary for execution after your demise.

5. If you have children, ensure that they are well planned for. Many people spend a lot of time deciding what to do with their assets and overlook that they need to appoint guardianship for their children if they are no longer around. There are many details to consider when it comes to guardianship, especially concerning your child's welfare.

6. If you don't have a financial advisor, get one. Most financial planners and advisors are proficient in estate planning and can provide asset protection advice and solutions according to your needs. Otherwise, there may be gaps in your estate plan, which may pose an issue for your loved ones.

The six mistakes mentioned above are extremely common in estate planning and now that you are aware of them, make a conscious effort to avoid committing them! Most importantly, take the time to plan for your eventual departure, even though you may think you still have years to go. Life is unpredictable, and as the adage goes, "Better to be safe than sorry." The key to successful estate planning is being prepared!

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