Estate planning is something that every person deals with at some point. Estate planning can give you a piece of mind and ensure that all of your assets and interests are covered after you are no longer living. You may also be a party to someone else’s estate. However, many people are unaware of what estate planning entails. The lack of knowledge could lead to some estate planning mistakes that may prove costly in the long run. Fortunately, many estate planning mistakes can be avoided. Here is a look at some popular estate planning mistakes and how to avoid them.
Failing To Plan
Estate planning is an uncomfortable subject for many people. Very few people enjoy thinking about the next steps after they die. As a result, many people forget to draft the legal documents to protect themselves and their loved ones. Research shows that more than 50 percent of American citizens do not have a will.
Attorneys note that everyone should have a will, regardless of their financial savings. Be aware that your assets will be distributed when you die. If you do not have a plan in place, the courts will decide who receives your assets. Create a financial power of attorney, which identifies the person that you want to make the financial decisions on your behalf if you become ill. Also, consider creating a healthcare directive, which outlines your preference for medical care if you become terminally ill.
Failing to name beneficiaries is another mistake that you should avoid while you are estate planning. If you have a life insurance policy, designate a beneficiary so that they can receive your assets without having to go through the probate process. The probate process could potentially slow down the disbursement of your assets to your family. If you have an annuity or 401(K) plan, add a beneficiary to those as well. If circumstances change in your life for some reason, make sure that you have your accounts amended.
Forgetting The Title On Your Trust
Trust accounts are very beneficial. They help protect your assets from being taken by creditors. Trusts help ensure that your estate gets distributed during your desired time frame. Trusts also help keep your financial information private. Avoid moving assets such as stocks or cash into your account. Re-title your assets in the name of your trust. If you forget to re-title your assets, they may go through probate court
Think About Supplemental Needs
If you have a loved one that is receiving government benefits, they are restricted regarding the number of assets that they can have while receiving those benefits. Trying to pass your assets to a loved one receiving government benefits may cause problems unless you do some research. Consider creating a supplemental needs trust so that they will be eligible to receive your assets without getting penalized. Florida Estate Planning Lawyers can help you create a supplemental needs trust.
Research Different Types Of Assets
Research the difference between probate and non-probate assets. Probate assets are any assets that have to pass through a will. Any movement regarding those assets must be approved by the court. Non-probate assets include any accounts that have specific beneficiaries and different trusts.
Making Your Child A Joint Owner
Do not make your child a joint owner of your assets, as that gives any of your child’s creditors access to your money. Consider naming your child your power of attorney. That will give your child access to your accounts while keeping them separate from your child’s estate. Make sure that you set up the appropriate documentation to avoid a potentially serious issue in the future.