If you have not started your estate plan yet and would like to do so, it’s a good idea to go over some of the common mistakes so you can avoid them. There are several serious mistakes that could hurt you or your beneficiaries, but you can avoid them with a thorough estate plan.
Your estate plan is supposed to be designed to protect you in life and to provide for those you love after you pass away. The poorly made estate plan or lack of estate plan could mean your wishes aren’t known or carried out.
Here are three mistakes that you should avoid.
- Not having an estate plan
Not having an estate plan at all is a big problem. When you don’t have an estate plan, there is no way for anyone to know your wishes or intentions. If you are incapacitated, you may not have someone appointed to make decisions regarding your care. If you die, you may not have an executor selected or have a will to help your family avoid probate.
- Not using gifts to reduce your estate’s value
Another issue to avoid is failing to use gifts to reduce the value of your estate. If your estate is large enough to be taxed, you’ll want to start using gifts to reduce its value. If you don’t want to use gifts, another option may be to set up an irrevocable trust to take assets out of the estate and keep it under the federal estate tax limit.
- Not having your life insurance go into a trust
When you die, your life insurance pays out and may be taxed by the Internal Revenue Service. However, if you have the benefits go into a trust, you may be able to avoid that problem completely since the trust won’t pay into your estate. This helps your loved ones save money on taxes, so they get more of what you’ve left behind for them.
These are three estate planning mistakes to avoid. With good planning, you can protect yourself, your beneficiaries and the assets you want to leave behind.