Estate planning is important for everyone, regardless of age or wealth. It ensures that your assets get distributed according to your wishes after you pass away.
However, many people make mistakes in their estate planning process that can lead to unintended consequences for their loved ones.
Neglecting to create a will
In 2023, only 46% of Americans over 55 years of age had wills. Failing to create a will means that your estate will get distributed according to state laws, which may not align with your wishes. Without a will, your loved ones could face lengthy legal battles and unnecessary stress.
Forgetting to update your estate plan
Many people forget to update their plans after major life events, such as marriage, divorce or the birth of a child. Failing to update your plan can result in assets going to unintended beneficiaries or ex-spouses.
In addition, certain assets, such as retirement accounts and life insurance policies, pass directly to beneficiaries outside of your will. Regularly review and update beneficiary designations to ensure they align with your wishes.
Not planning for incapacity
Estate planning is not just about what happens after you pass away. It is also about planning for incapacity. Failing to designate someone to make medical and financial decisions on your behalf if you become incapacitated can lead to confusion and disputes among family members.
Not considering taxes
Failing to consider tax implications when creating your estate plan can result in a larger tax burden for your heirs.
Estate planning is complex, and each individual’s situation is unique. Ensure that your estate plan addresses your specific needs and goals.
