Unfortunately, estate planning is not always taken as seriously as it should be or may not be considered at all. Failing to conduct any estate planning is the worst mistake that can be made and studies show that many Americans who have reached the age where they should have come up with an estate plan have not done so. There are several errors that can be made when estate planning, or failing to estate plan, so it can be useful to know what those mistakes are to avoid them.
The number one mistake in estate planning is failing to have a will. An effective estate plan includes a properly executed will. One survey revealed that 64 percent of American adults do not have a will. A will is important to document the wishes of the estate planner. Without a will, assets are divided according to the laws in the estate planner's state and those laws may not be consistent with the estate planner's wishes. The next important estate planning failure to be aware of is failing to update your will. Just as life is not set in stone, and changes, a will should be updated to reflect important life changes that may impact the wishes of the estate planner. Marriage, divorce and other circumstances may all impact an estate plan.
Because estate planning reflects the wishes of the estate planner concerning their beneficiaries, it can be useful to evaluate the ability of the heirs to manage their future inheritance and may be helpful to enlist professional help in administering the estate for the heirs. Along these lines, trusts can be an effective tool to manage assets that compliments a will and is an important part of an overall effective estate plan. It is also important to take the decision of who will serve as executor of the estate or trustee seriously and be familiar with the factors that should influence that decision.
Effective estate planning is important but is sometimes overlooked for a variety of reasons. Being familiar with what to include in an effective estate plan, and what to avoid doing, is a step in the right direction towards establishing your own estate plan.
Source: CNBC, "Don't drop the ball when planning your estate," Trey Smith, Sept. 13, 2016