Estate planning is a task financial experts say you should never neglect. Despite this, according to a 2017 survey, 6 in 10 Americans don't have a will. While not doing any estate planning is the biggest mistake of all, here are three significant estate planning errors to avoid.
1. Poor Planning For Beneficiaries
Improperly planning for beneficiaries can have a significant impact on your intended heirs. Be sure to update your beneficiaries if you:
• Marry or divorce
• Have any new children
• Failed to list contingency beneficiaries for property assets, retirement accounts, and insurance policies
• Forgot to name guardianship when leaving assets to minor children
Pay close attention to these aspects of planning to ensure your assets are gifted to your beneficiaries as you've intended.
2. Forget To Update Asset Ownership
Over your lifetime your assets can drastically change. Once you create your estate plan, it's smart to update it periodically. Be sure your plan reflects:
• Current home, cars or other major assets
• Any changes in your net worth
• Accuracy regarding current joint ownership of any assets
Additionally, be sure your document is never written too specifically if conditions are likely to change. For instance, if you list a specific investment and it's sold during your lifetime, your estate will be forced to repurchase the exact investment to give it to your heirs. This could be a very costly mistake if the value has significantly risen over time.
3. Neglect To Include A Residuary Clause
A residuary clause in your will deals with any assets you didn't list when it was created. This ensures any assets you purchased after the fact or perhaps forgot to include in your initial estate planning are passed onto your heirs according to your wishes.
Estate planning is not an easy part of life. However, it's a necessary one. Poor planning usually leads to additional expense, hardships, and heartache for your loved ones. Most estate planning errors are avoidable. By establishing, understanding and maintaining your estate plan, you'll ensure your wishes are carried out properly.
At Aldrich Legal Services, we are pleased to assist you with your estate planning needs. We draft and review wills, trusts, and real estate deeds. It is important that your estate planning documents meet the legal requirements. Located in Plymouth, Michigan, we assist clients throughout southeast Michigan.