You probably know the importance of having a proper estate plan in place. Wills, trusts, and other estate planning methods protect your assets, but also provide your family peace of mind after you are gone.
According to Kiplinger, it is equally important for estate planners to avoid mistakes when developing their plans. Here are a few common issues and how you can stop them from taking a toll on your estate and assets.
Providing minor children large inheritances without a guardian
Leaving assets to minors in the event of the unthinkable ensures you continue to meet their financial needs. However, you must also use your will to name a guardian or the court will appoint for you. Additionally, make sure your will contains instructions on how the guardian can use money intended for your minor child. While it is acceptable to spend these funds on things like medical care or school costs, specific language can prevent frivolous purchases that do not reflect the needs of the child.
Neglecting beneficiary designations
Life insurance policies and retirement accounts have beneficiary designations, which indicate the heirs you wish to receive the proceeds. If you fail to complete beneficiary designations, the court will step in to determine who should receive them. Even if you include language in your will regarding whom you wish to receive these benefits, the current beneficiary designation overrides it.
Not updating your will
Changes and updates to your will should occur as your life evolves. Divorce, new marriages, the birth or adoption of a child, gaining or losing assets, as well as many other events warrant a review of your will. Moving to a new state also warrants a will review, as you may need to make updates to account for changes in laws.
Even if you do not have a reason for an update, you should still review your will every three to five years. That way you can rest assured it continues to meet your needs.
