Estate planning is crucial for ensuring that your assets are managed and distributed according to your wishes after your death. However, many people make common estate planning mistakes.
In this post, we will explore these estate planning mistakes in further detail and smart tips for how to avoid them
5 Estate Planning Mistakes
Avoiding these common pitfalls can make a significant difference in ensuring your estate plan effectively protects your assets and loved ones.
1. Not Having an Estate Plan
Mistake: Many people avoid creating an estate plan, thinking they don’t need one until they’re much older or that it’s too complicated.
How to Avoid It: Start planning early, no matter your age. Even if you don’t have substantial assets, an estate plan can ensure your wishes are respected regarding medical decisions, guardianship of children, and asset distribution.
2. Not Updating the Estate Plan
Mistake: People often create an estate plan and then forget to update it. Life changes such as marriage, divorce, the birth of children, or the death of a beneficiary can make a plan outdated.
How to Avoid It: Review your estate plan regularly, especially after major life events. This includes ensuring that your beneficiaries, executors, and trustees are still appropriate, and that your plan reflects any changes in assets or personal circumstances.
RELATED: Why You Should Update Your Estate Plan When You Buy And Move Into A New Home
3. Not Having a Will or Trust
Mistake: Some people rely solely on a will, while others fail to create one at all. A will alone may not protect all assets, and if you pass away without one, state laws will determine how your assets are distributed, which may not align with your wishes.
How to Avoid It: Consider creating a trust in addition to a will. A trust can help avoid probate and ensure more privacy and control over how assets are distributed. Work with an estate planner to determine which approach is best for your situation.
4. Failing to Plan for Incapacity
Mistake: Many people fail to plan for the possibility of becoming incapacitated due to illness or injury, leaving decisions about healthcare and finances up to the court.
How to Avoid It: Include a durable power of attorney (for finances) and a healthcare proxy (for medical decisions) in your estate plan. These documents allow trusted individuals to manage your affairs if you become unable to do so.
5. It Won’t Be My Problem
Mistake: Some people think that once they have passed away, they don’t need to worry about who will take care of gathering and dividing their assets.
How to Avoid It: Creating an estate plan, including a will or trust, no matter how little or how extensive your assets are, will assist the personal representative or successor trustee in gathering, selling, and distributing your assets, and possibly avoiding probate if your assets are titled correctly. If probate is needed, it can be a lengthy and expensive process.
By addressing these common estate planning mistakes, you can help ensure that your estate plan will protect your loved ones, provide clarity, and minimize complications.
When It’s Time To Work With A Estate Planning Lawyer
Consulting with a lawyer can help you reduce the chances of making these common estate planning mistakes. If you’re looking for an estate planning lawyer in Rochester Hills, Auburn Hills or Troy, consider Stephanie Krane-Boehmer. She is an experienced Michigan estate planning lawyer who can help you prepare your plan.
Find out if Stephanie Krane-Boehmer is right for you – contact Stephanie for a free consultation.
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