1. Not understanding the plan
Many people rely on an estate planner to make all the decisions and to ensure that everything in the plan is done properly.
2. Outdated beneficiary designations
Failing to update the beneficiaries of your estate may allow your assets to go to your parents and siblings instead of your spouse and children, for example, because that is what you put on the form when you initially filled it out.
3. Failure to update asset ownership
Like beneficiary designations, assets need frequent review. You might have picked up a few new assets in your own name and a few others in joint title with your spouse or someone else, for example, or the Tax Cuts and Jobs Act may have affected your estate tax.
4. Failure to update powers of attorney
You should name at least two powers of attorney – one to speak for you when it comes to overseeing your medical care and a second one for managing your financial matters. As with your beneficiary designations, your choices in powers of attorney may change with time.
5. Failure to update your plan
Update your plan any time your family undergoes major changes, such as birth, death, marriage, or divorce. Review your plan any time there are changes in your net worth, job status, residence, or overall composition of your estate.
6. Not coordinating trusts and retirement plans
If you are like many people, you designated your living trusts or any other trusts as the beneficiaries of your retirement plans. While there are good reasons to name a trust as an IRA or other retirement plan beneficiary, naming the wrong type of trust as an IRA beneficiary may increases taxes.
7. Failure to fund living trusts
A living trust, also known as a revocable trust, names one person responsible for managing your assets for the eventual beneficiary. Assets owned by the trust avoid probate and assist in disability planning and a number of other issues. In many cases, the trust has to be funded after all of the parties sign it, which means you have to transfer the legal title of those assets to the trust. That process is easy for some assets, such as household and personal effects. The process is more complicated for other assets, such as real estate, vehicle registration, and financial accounts.
Consulting with effective, professional representation can help you avoid some of the most common pitfalls associated with estate planning. For more information, contact the
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