Estate planning goes a long way in protecting your family. Many families fail to understand how common mistakes can impact their future. What can you do to protect your loved ones and your assets?
The best way to protect your family is to understand the different type of estate planning mistakes and what steps to take to keep your estate plan strong. Below is a list of mistakes, and what you can do to avoid these mistakes in the first place:
Naming the right person: The executor or trustee named in your estate holds a lot of responsibility; naming someone who is not able to commit the time and energy to handle the issues involved in your estate can result in lack of attention to details and conflicts in the future. It is important to carefully consider how your executor or trustee will be able to handle managing your estate and make sure you pick someone who is responsible and respected by your family to handle all matters.
Inheritance of personal property: Deciding who gets the fine dining dishes or beloved childhood dollhouse may not seem like a big decision, but failing to specifically state who will receive certain personal pieces could lead to arguments and torn family relations that are difficult to repair once you are gone. It is simple enough to add a clause to state which child or heir will receive a specific piece of personal property to prevent arguments and fights down the road.
Title of assets: Your assets transfer according to how the plan is set up. Your 401(k) will transfer in a different way compared to your insurance policy and other financial plans. This is why it is critical to make sure your assets are titled properly and your beneficiary designations are updated so the right person is receiving your assets.
Digital assets: Many people forget to include their digital assets in their estate plans. These include photos and music on your phone. It is best to include these in your plan and how your fiduciary can access these assets so they are preserved according to your wishes.
In addition to these issues, one of the biggest mistakes to failing to update your estate plan. This may seem like an obvious thing to do, but when life changes happen, sometimes the last thing you are thinking about is your estate plan. Try to remember that any time a life change occurs, you get divorced, remarry or add children to the family, you should review your estate plan and update it accordingly. The same is true when significant changes to your assets occur. It is important to document these changes and make sure your wishes are able to be honored.