You probably know how important an estate plan is for your family. A good plan will minimize costs and ensure your family receives your assets in the manner intended.
While having a plan is crucial, you must also avoid common mistakes when drafting yours. Kiplinger explains some of the most frequent estate plan issues and how you can avoid them.
Neglecting your beneficiary designations
Life insurance policies and retirement accounts come with beneficiary designations. You supply a primary and secondary beneficiary, and the heirs you name receive the assets upon your death. Beneficiary designations supersede any information contained within wills or trusts, so update them accordingly. For example, conduct a review of your entire estate plan after new marriages, divorces or the birth of a child.
Failing to name a guardian for minor children
In the event that something happens to you and your spouse, your children must have a responsible, caring guardian. If you fail to name one in your will and the unthinkable happens, the court will decide. While the court’s decisions often coincide with the deceased’s preferences regarding guardianship, it is best to make these decisions on your own. Think long and hard about the selection and make sure they are on board before anything becomes official.
Not considering long-term care needs
Estate plans do more than provide for your family after you are gone. They also provide for you while you are still alive. Things like disability insurance and long-term care planning ensure you have what you need in case you experience a serious injury or major illness. Planning for these possibilities now prevents you from using portions of your assets to cover medical costs at a later date.
In addition to the above, make sure your family knows the location of your will and other estate plan documents. Keeping personal documents related to finances and property organized is also important, as your family will need these documents to access your assets.