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An estate plan is a compilation of important documents that outlines how your assets should be handled and distributed after you die to ensure financial stability and peace of mind for your loved ones. These assets can include valuables such as your home, company, belongings, and investments. An estate plan should also designate a guardian of children, trustees of trusts, and executors. It is crucial to create an estate plan.
Even so, according to a survey from Caring.com, only 34% of Americans have created an estate plan. Delaying estate planning can lead to various consequences. In this guide, we address common estate planning questions, including what you need to know about estate planning mistakes to avoid, how they can affect you and your loved ones and the most important aspects of an estate plan.
When you avoid establishing an estate plan, your family members and other loved ones may have issues receiving your assets for years. This can put unnecessary strain on those you care about and their finances. They may need to wait months or years for the court and your state’s laws to decide who gets the money and when.
Making an estate plan allows you to make those decisions, assign someone you trust to execute your plans and minimize estate, gift and income taxes.
Anything can happen at any time and derail your time with your family. If you die before creating an estate plan, there is a chance that the asset you intended for one person might go to a different family member that is contrary to your wishes.
Estate planning is important for your children as well. Let’s say a child loses consciousness in an accident. Because the parents lost legal authority over the child when they turned 18 and became an adult under the eyes of the law, parents may need to go to court to obtain guardianship before insurance companies and hospitals will allow them to make critical decisions for their child.
These situations make it essential to do estate planning earlier to ensure that your assets are protected and that all the benefits and permissions are in place to prevent any additional expenses, delays and worries.
As someone who is new to estate planning or is about to develop an estate plan, you may have a few questions about how to execute this process properly and make correct decisions. Here, we included some of the most common estate planning questions and answers that may be vital to your success and your family’s happiness.
We recommend the regular review of your estate planning documents every few years or whenever a significant life event occurs. This can include getting married, divorced, losing a family member, gaining a new child, moving to a state with different estate laws or spontaneously receiving a large sum of money through inheritance or winning the lottery.
We recommend that clients review their estate plan every three to five years or at least annually if you review your financial plan regularly. Otherwise, those major life events should trigger a sooner review of your estate plan.
There are three considerations to minimize legal and family disputes and ensure a smooth distribution process:
Common estate planning mistakes include putting off estate planning, forgetting to review and update your estate plan, having outdated beneficiaries on life insurance policies and retirement accounts, forgetting to include your digital assets, forgetting to assign a representative or agent under a power of attorney and avoiding discussions with loved ones about your estate plan.
These mistakes can cause family and legal disputes. Inconsistent and outdated information can clash with new laws and new family situations, and without the correct professionals and trusted individuals to handle your estate, there may be considerable delay and expense to your loved ones.
Estate plan mistakes can lead to significant challenges for both you and your family. Here, we’ll go into more depth about the most prevalent errors in estate planning, their consequences and the most effective strategies for avoiding them.
Certain actions or a reluctance to take action can often put your family’s — and your own — financial future at risk, making it essential to prioritize estate planning. Here are some of the most common ones:
Here are some helpful tips and strategies to ensure a successful estate plan:
A well-organized estate plan is one of the most meaningful gifts you can leave behind for your family and loved ones. It is essential to clearly define your beneficiaries, executor and distribution method by working with an experienced attorney and updating your estate planning documents regularly.
Are you ready to do your estate plan? Our experienced estate planning attorneys at Johnson Duffie are ready to assist you with your estate planning needs. Our law firm has offered clients legal guidance for over 100 years in creating wills, trusts, powers of attorney, living wills and more. To avoid estate planning mistakes, contact our attorneys today for professional assistance.