Planning your estate gives you the opportunity to make decisions about how you want your assets handled after death. A proper estate plan gives you and your family peace of mind knowing that you were able to make the designations you wanted and maximize the value of your estate.
By familiarizing yourself with the common estate planning mistakes, you can avoid these issues in your legal affairs.
Naming minor children as direct beneficiaries
Children less than 18 years old cannot receive assets directly from your estate. Instead, an appointed guardian holds property from an estate for the minor. If you designate a trustee or custodian for any minor children you select as beneficiaries in your will, you can avoid a court-appointed guardianship and save your estate money.
Not updating after major life events
If you decide to relocate to a new state, estate documents you drafted in your previous home state may not meet the new state law requirements. Revise your estate planning documents after any such major life moments.
Some big events that can alter estate planning include separation from your spouse, remarriage, or the death or marriage of a named beneficiary.
Additionally, if you get a divorce, you should review your beneficiary designations in your life insurance plan or an IRA since the end of your marriage will not automatically invalidate any gifts made in these plans.
Not revising after new estate tax laws
Over the past decade, the estate tax exemption amount increased significantly. Individuals who completed their planning years ago should review whether their plans are as tax efficient as possible. As you work on your estate planning documents, consult with professionals who are familiar with the current tax laws.