Estate planning is not something most people look forward to, but it is important, especially as you get older. Sadly, many people rush through the process or lack the knowledge needed to ensure everything is in place and their heirs are the ones who must deal with any issues that arise. The following are five estate planning mistakes that are frequently made and how best to avoid them.
Having No Plan
People may assume they don’t have enough assets to need an estate plan. However, nothing is further from the truth. Even if you own nothing more than the clothes you are wearing, you have the right to decide where they go in the event something happens to you. An estate plan differs from a financial plan but many don’t realize this. Make certain you have both in place. Doing so is easy with the help of services from mytexaslegacyplan.com. Here you will find assistance with financial planning, estate planning, probate law, and more.
Failing to Make Updates
A single person in their 20s will have a much different estate plan than a married individual in their 40s with young children at home. Men and women frequently create an estate plan and then fail to update it as their circumstances change. No adult wishes to read their parent’s will when the parent passes only to learn custody has been granted to their aunt although the child named in the will is now in the 50s. Sadly, this does happen. Set aside a time each year to review the estate plan and make certain changes are made in accordance with your changing circumstances.
Choosing the Wrong Executor
Men and women often choose a close family member to be the executor of their estate. While this would seem to be the logical choice, it’s often better to choose an independent party to take on these duties. He or she may have more experience with the process and know how to navigate the legal system while ensuring all steps are completed as required. Furthermore, the family member will be grieving and may not feel equipped to take on these tasks while they mourn. Keep this in mind when the decision as to who is to be named executor is made.
Failing to Plan for a Disability
Medical bills can quickly eat up a person’s wealth. However, many people never stop to consider how they will pay for long-term care or who will make decisions for them if they become incapacitated. Nobody wants the child who burns through money to be in charge of his or her parent’s finances but this does happen when an estate plan has not been created. Determine who will serve as power of attorney or create a living trust for situations such as this.
Paying Too Much in Taxes
There are ways to reduce the tax burden put on heirs when a person dies. For example, the IRS currently allows each spouse to gift up to $14,000 a year without the funds being subject to the estate tax. This means a couple can see $28,000 in savings each year if they choose to provide loved ones with gifts. Speak to a reputable estate planner to learn of other ways it might be possible to reduce the estate tax burden upon your passing.
Estate planning is an essential task and one that should never be delayed. If you do not have a plan of this type in place or believe your current one needs to be updated, take steps to handle these tasks immediately. One never knows when their time will come so it’s best to be prepared now.