When you decide to make a will and estate plan, the task ahead of you can feel overwhelming. How are you going to decide who gets what and who should manage distributing your assets? If you aren’t strategic in your estate planning, you could make a mistake that could impact your beneficiaries or your tax liabilities.
So, it’s important to avoid making these six common estate planning mistakes:
- Not having an estate plan. About 4 in 10 Americans lack having a will or estate plan. Many avoid estate planning because they don’t like thinking about death. Yet without an estate plan, you won’t have control over how your assets are distributed. The state of Michigan will. The state will appoint a personal representative for you, which will take time and that person may not give out your assets the way you would have.
- Not updating your estate plan. If you have an estate plan, you need to update it when your life changes significantly. For example, if you move to a different state, if you divorce or remarry, if you want to include new grandchildren as beneficiaries or if your spouse dies, you need to update your estate plan.
- Limiting your estate plan to completing only a will. A comprehensive estate plan addresses other concerns than your assets. With a living will, you give your family peace of mind they are following your end-of-life care wishes. By having a power of attorney document, you can designate someone to handle your finances if you become incapacitated. With a health care power of attorney document, you can choose someone to make medical decisions for you in case you can no longer do that.
- Not completing an estate plan with an experienced estate planning attorney. You may think about creating a will on your own. However, working with an estate planning attorney on a comprehensive estate plan is a better option. An attorney can advise you on how to minimize the tax burden on your estate and help you establish a living trust for your underage children.
- Not planning ahead for long-term care. If you need nursing care near the end of your life, you may need to spend down significant assets to qualify for Medicare. An estate planning attorney can advise you on how to avoid having to spend down nearly all your assets for long-term care.
- Not informing your family of your estate plan. Your family needs to know where you keep your estate plan and what assets they will receive. If you plan to give your children unequal assets, they should know why and hopefully that will avoid them pursuing litigation over your estate plan in the future.
By being diligent in your estate planning, you can have peace of mind about the future. You know you will have done your best to give your family a plan for distributing your assets and following your end-of-life wishes.