When people hear “estate planning,” they assume it’s just for the wealthy. That’s simply not the case. Everyone can benefit from an estate plan, but you’ll want to avoid some common mistakes.
What is an estate plan designed to accomplish? It allows you to pass on your assets the way you desire and specifies other actions, such as naming a guardian for minor children if you are no longer around. In creating a plan, several key documents are involved — a will, a trust, a financial power of attorney and a medical power of attorney or health care directive.
Now, let’s consider a few estate-planning mistakes:
- Not communicating your plans. You’ll need to inform your family about whom you’ve chosen as executor — the person who will administer your estate — and who’ll be trustee, managing your trust’s assets. To avoid unpleasant surprises when your estate is being settled, consider letting your children or other close relatives know who will be receiving what.
- Not reviewing your plans periodically. Once you create your estate plans, don’t forget about them. Over time, your personal situation might change — you might remarry or bring in new children. Your interests might change, too — perhaps you’ll become deeply involved in supporting a charitable organization. Given these and other potential changes, you’ll want to review your estate plans regularly to see if they need to be modified.
- Not updating beneficiary designations. You need to review the beneficiary designations on your life insurance policies, investment accounts and retirement assets regularly. Changes in your life might affect your beneficiaries. Beneficiary designations are powerful and can even supersede your will, so you’ll want to update them as needed.
- Not re-registering assets placed in a trust. A living trust offers many benefits, such as bypassing probate when it’s time to settle your estate. However, simply establishing the trust, by itself, might be insufficient. You likely need to re-register assets, such as your investments, so they are owned officially by the trust, not you. This is essential for the trust to work as intended.
One other mistake is not getting the help you need. Estate planning can be complex, so you’ll want to work with an attorney, your financial adviser and a tax professional.
By avoiding key mistakes and working with a qualified team of professionals, you can create an estate plan that will help you leave the legacy you desire.
– Roberto De Jesus and Amanda Yingling are financial advisers for the Edward Jones branch on Cedarcrest Road in Acworth.