Estate planning is challenging. The stakes are high and the process can be intimidating – particularly if you don’t have legal guidance you can depend on. In this blog entry we are going to highlight five common mistakes that many people make while planning their estate, and how to avoid them.
1. Keeping It a Secret
Many people think that they should keep their will or other estate planning documents a secret from their loved ones. While this can be tempting because it will allow you to avoid any confrontation or disputes about who you are leaving what, it can be a big mistake. If you don’t deal with these potential issues now while you are alive, your loved ones may end up in major legal and emotional battles that could be very painful and very expensive. Of course you don’t want that to happen – so it is best to address any issues now while you still can.
2. Waiting too Long
Most people put off estate planning until they are approaching retirement age, or even longer. This can be a costly mistake. Starting younger can save you money because you won’t have nearly as many assets to consider. Over time as you build wealth and gain assets, you can easily add them into your will or other documents as needed. In addition, in the event that you fall ill or get in an accident, it is important to have things like a Power of Attorney decided on well ahead of time.
3. Setting and Forgetting
On the other hand, some people make the mistake of creating a will when they are young, and then failing to update it as the years go by. For most people, a will that is created at the age of 30 will have very little use when they are 60. Reviewing your will at least every couple of years while you are young, and more frequently as you age, will allow you to keep it current. An updated will is much easier to follow, which means it is much less costly for your loved ones.
4. Failing to Consider Taxes
As you get older, it is a good idea to start thinking about how taxes will impact your assets after your death. Putting things in your estate planning, such as a legal trust, can help you to avoid some of these taxes. Also, you can give loved ones up to $13,000 per year without the IRS gift tax kicking in, so that may be something to consider.
5. Lacking Limitations on Inheritance
Everyone wants to leave their loved ones with as much money as possible. The problem is, giving them a large lump sum of money is often not the best thing for them. If you have an 18-year-old grandson, for example, leaving them too much money without restrictions will likely result in it getting wasted. Consider setting up a trust or other vehicle that will ensure your loved ones get your money in a way that you believe will benefit them most.
If you need help planning for your future, please get in touch with us today. We look forward to hearing from you!