Everyone should have an estate plan in place.
Estate planning isn’t just something for high-net-worth individuals. Estate planning is for anyone who wants to ensure that their items or money is being given to who they want. Without an estate plan, your items could end up in the wrong hands. Or someone you don’t trust could be put in charge of your healthcare and financial decisions.
So, to prevent any estate planning mistakes from impacting you, we’ve outlined common errors you can avoid.
Not Having One
The most common mistake people make when it comes to estate planning is not having one. Oftentimes, people assume that they will eventually get around to creating a legally binding will and put a trust in place, but they pass it on before it happens. This typically leaves family, friends and business partners scrambling to figure out who will receive assets and who get the final say in their affairs.
Not Naming Contingent Beneficiaries
If you have an estate plan and have named a beneficiary you might want to consider having it revised to include a second beneficiary (also known as a contingent beneficiary). This is a person who will receive an asset or trust if the primary beneficiary passes. Naming a contingent beneficiary is important because the main beneficiary could pass which would mean any assets distributed to them will go back to the estate and remaining loved ones will likely need to go through a lengthy court battle to determine who it will end up with. So, to prevent this common mistake from impacting you, it is best to name a contingent beneficiary on your final plan.
Not Establishing Retirement Care
From nursing homes to long-term care facilities, and drop-in help; retirement looks different for everyone. Given these differences, it is only right that a plan is established for your retirement needs.
Retirement care is an important topic to cover in your estate plans because there is a chance that you will become medically incapacitated. If this happens, this means that another family member will need to step in and manage your affairs for you. Without any type of documentation stating your wishes, you might not receive the care you want. Or, you could be stuck in a facility that you did not pick.
Accidentally Creating a Tax Burden
Estates are usually subject to federal gift tax and estate tax with some states imposing an additional state-level estate tax. To prevent your loved ones from dealing with a tax nightmare when you pass, you should take the time to avoid as many unnecessary bills as possible.
To do this, you should be making use of the yearly exclusion to transfer wealth tax-free. You should also make sure that your estate has enough liquid assets available to pay any taxes that remain once you are gone. Otherwise, not having enough to cover the bill could mean your loved ones have to sell assets.
Regardless of what your estate goals are, you will want to have a secure plan in place. If you don’t have a plan and are thinking of creating one, give us a call at 407-328-5001.
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