Top Estate Planning Mistakes to Avoid

Estate plans, just like the individuals for whom they are created, are always unique. To be most effective, the specifics of an estate plan will account for the distinctive factors, goals and aspirations of a person’s life. However, common mistakes made in the planning process can derail your objectives, leaving your beneficiaries to possibly deal with avoidable tax implications and unforeseen difficulties. To set you up for success, here are seven considerations to help ensure your assets are managed according to your wishes.

Don’t treat estate planning as a one-time checkbox.

People tend to consider an estate plan as something that should be addressed once but not necessarily revisited. The issue this presents is that subsequent life events are not considered. For example, you may welcome a new addition into your family after developing an initial estate plan. To ensure the child is included in your wishes, you’ll need to update your beneficiary designations across all accounts as well.

Plan with clear goals.

For an estate plan to be most effective, you first want to consider what you are accomplishing. When you establish goals for your estate plan, the process is likely to be more rewarding for all involved. By clearly outlining your desires, you can rest assured that your assets will go to the beneficiaries you specify. This also negates the possibility of decisions being made for you in probate court and intended beneficiaries waiting on the verdict.

Don’t mistake a will for an estate plan.

Creating a will is a key element of estate planning. However, it is important to remember that the completion of a last will and testament legal document does not comprise a full estate plan. Among other things, you want to consider trusts as well when establishing an estate plan.

Address long-term care needs.

Long-term care costs continue to rise, and this is often not considered in the estate planning process. The sooner you begin to plan, the less the expense of long-term care will impact the value of your estate. Effective long-term care planning helps ensure you receive the quality of care you need while lessening the burden on loved ones.

Account for digital assets.

Documents are increasingly maintained in digital rather than physical copies. This is important to consider in the estate planning process. If you have valuable digital assets, whether pictures or official documents, they are likely password protected. To ensure those assets are distributed as intended, you want to have a plan for others to access them.

Title assets clearly.

Taking the time to properly title assets is something you control to help avoid probate. You may have some assets for which you have sole ownership, while others are jointly owned. Clear titling and differentiation of these assets will help ensure they are distributed according to your wishes.

Don’t forget tax planning.

As part of your estate planning, remember that beneficiaries pay estate taxes. It is always helpful to talk with your advisor to review your specific situation and take preventative steps regarding estate taxes.

Conclusion

When implemented correctly, a well-executed estate plan can ensure your wishes are carried out after incapacitation or death and provide financial security for your beneficiaries. If you have additional questions about creating, reviewing or updating your estate plan, please reach out to your wealth advisor. If you are not working with one or would like a second opinion, we would be happy to help. We encourage you to schedule a phone call or virtual meeting with our Client Development team.

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