Avoid These Estate Planning Mistakes

Estate planning is the best way to insure that all of your assets are distributed as you wish when you pass away. If you have a significant amount of financial assets and do not plan ahead, then your estate might not be distributed as you would like. Unfortunately, mistakes are often made when setting up these plans. Here are three key mistakes to avoid when creating your estate plan.

Lack of Comprehension

One common mistake people make is not understanding the details of the plan. It's easy to ignore something that you don't fully comprehend and sign off on the plan anyway. This could easily have serious negative consequences down the road. Never sign any estate planning document until you are certain that you grasp all of the details. If there is something that does not make sense to you, have your estate planner explain it in layman's terms.

Lack of Beneficiary Update

Another frequently seen mistake regarding estate planning is the lack of updating your beneficiaries due to changing circumstances. For example, if you get divorced, you may want to exclude your ex-spouse from inheriting your property. To do this, you will need to change the name of the beneficiary on your will or other official documents.

Make certain any needed changes are made on all necessary documents, not just your will. In some cases, the name of the beneficiary on a document such as the beneficiary form of a retirement account will supersede the name on a will.

 Lack of Living Trust Funding

Most people who leave sizable estates want to avoid having their heirs subjected to a lengthy and perhaps contentious probate process. A key way to avoid having your heirs go through probate is to set up a living trust. This document allows the beneficiaries to skip probate court and receive their inheritances in a timely manner.

To set up a living trust, you must transfer legal ownership of your assets to the trust. If you forget to do this, then your heirs may not be able to avoid probate. Your estate planning attorney will assist you in doing this, but ultimately it's your responsibility to make sure that it is done.

Estate planning is essential for anyone who expects to leave behind a considerable amount of property when they die. The procedure can be quite complicated in some instances, however, so getting expert advice from a qualified professional is crucial. If you need to create an estate plan, consult an experienced estate planning lawyer in your area.