Estate planning enables you to ensure that your loved ones receive the assets you intend for them to have after you pass away. There are several components that come together to form a comprehensive estate plan.
There are certain mistakes you should avoid when you’re creating an estate plan. Any of these mistakes can mean that your loved ones don’t get what you wanted them to get.
Mistake #1: Relying solely on a will
You shouldn’t rely solely on a will to pass down your assets. Instead, most people need to have a will for certain assets and the rest should be placed in trusts. Your estate plan should also include certain other documents, such as your advanced directive and power of attorney forms. All of these work together to ensure you have the care you need if you become incapacitated and that your loved ones get their inheritance.
Mistake #2: Failing to account for debts and expenses
Ensure that you include information about the debts your estate will be responsible for paying. This includes things like the mortgage and any other secured loans. You should also think about the expenses that will have to come out of the estate. Think about expenses, such as insurance on the home and property taxes.
Mistake #3: Including assets more than once
Each asset you own should only be included in the estate plan one time. If it’s in a trust, including a Totten trust, you shouldn’t include it in the will. When you include things more than once in the will, you can cause problems for the estate because it might have to obtain assets to comply with the estate plan. This could reduce the share that everyone else receives from the estate. It can also draw out the process of distributing and closing the estate.
All adults should ensure they have a suitable estate plan in place as soon as possible. Working with someone who understands your situation and can help you to set up the plan is beneficial.