Creating an estate plan is critical in ensuring your assets are distributed according to your wishes after you pass away. However, the process can be complex, and mistakes are common.
Understanding these pitfalls can help you create a more effective and reliable estate plan.
1. Not having a plan
A common mistake is not having an estate plan. Without a plan, the law determines how your assets are distributed, which might not align with your wishes. An estate plan gives you control over the distribution of your assets and ensures your loved ones are cared for.
2. Not updating your estate plan regularly
Estate plans are not set-and-forget documents. Life changes, such as marriages, divorces, births and deaths, can significantly impact your estate plan. Reviewing and updating your plan regularly or when major life events occur is essential.
3. Not considering digital assets
In today’s digital age, including digital assets like social media accounts, online banking, and digital investments in your estate plan is important. Provide clear instructions on how these assets should be handled and accessed.
4. Not planning for disability
An effective estate plan should also include arrangements in case you become incapacitated. Tools like durable powers of attorney and living wills ensure that your financial and healthcare decisions are made according to your preferences if you’re unable to make them yourself.
5. Choosing the wrong executor or trustee
The executor of your will or trustee of your trust plays a vital role in managing your estate. Choosing someone who is not capable or trustworthy can lead to the mismanagement of your estate. It’s crucial to select someone responsible who understands your wishes.
By avoiding these common mistakes, you can create a comprehensive and effective estate plan that safeguards your assets and provides peace of mind for you and your loved ones.