Many Americans do not feel a dire need to create an estate plan. Because it is a process many wait to initiate later in life, there is a greater chance that one could die without an estate plan in place. This is not only problematic when it comes to your wishes when it comes to your property and assets, but it could also generate issues and disagreements among your heirs.
While taking the time to draft an estate plan is an excellent step to take, it is also important to note that this process comes with flaws, hurdles and errors. Thus, it is best to familiarize yourself with the major estate planning mistakes you should avoid.
Estate planning mistakes
There’s no one-size-fits-all when it comes to estate planning, but there are common mistakes when moving forward with the process. To begin, most make the mistake of not starting early. Putting it off until there is a looming issue can create a situation where you are under pressure and are less likely to make rational decisions.
One of the biggest mistakes a person makes is to create an estate plan and then just let it be. An estate plan should be routinely updated, especially when a major life event occurs. An estate plan is not a one-time event but rather is constantly evolving with you throughout life. Another mistake to avoid is to not account for rising tax costs. This could result in a significant “after-death” tax bill.
Another mistake is to only consider death when drafting an estate plan. It is important to not overlook the possibility of incapacity. A major mistake estate planners tend to make is not including personal property holding significant value. If valuable collectibles are not included in an estate plan, it is likely the probate with liquidate this asset through a force sale that could be only 50% of its value. Finally, many fail to include digital assets in their estate plan. Most assume they will be captured in their household assets; however, this is often not the case, and many valuable digital assets are not accounted for.
Avoiding these mistakes
The best way to avoid these common estate planning mistakes is to not avoid the process. Using both legal and financial professionals can help you gain a full and accurate picture when drafting an estate plan tailored and unique to you, your needs and your wishes.