An estate plan protects you, your assets, and your family. Accordingly, it is important you take a thoughtful approach to the process to ensure the best possible results. Creating a will and trust, and making smart decisions when it comes heirs and executors is crucial.
However, it is equally important to avoid common pitfalls, which derail your plan. Forbes explains a few of these mistakes so you can take the proper steps to avoid them.
Not updating beneficial designations
Beneficiary designations are attached to financial accounts and life insurance policies. They specify who will receive the proceeds and how much each person receives. If there have been changes in your life, you must update these designations accordingly. No matter what is contained in your will, the designations on individual accounts override it. That means the wrong person may receive an inheritance, while the right person will be left out.
Not understanding what is included in your estate plan
You must play an active role in the estate planning process. Your input is necessary to ensure your assets are being handled in the appropriate manner. Ask questions and seek clarification if there is something confusing. While it is best to let professionals help you during the planning process, you are the one making the decisions.
Not funding trusts
Trusts are incredibly useful. They give you more power over how your assets are distributed, while also protecting you from taxes in some cases. However, trusts must be funded appropriately to ensure the expected results. In some cases, you may need to change titles on property. In others, you will need to create documentation showing ownership by the trust. If you create a trust but forget to fund, these assets will still pass through probate.