Creating an estate plan is every bit as challenging as it sounds since you have so many important decisions to make. Furthermore, the decisions you make now will affect your loved ones in the future.
There are a variety of estate planning mistakes that can cost you and your loved ones time and money. Here are three of the most common:
- Not having an estate plan: You assume that your assets will naturally pass on to your spouse and/or adult children. While this may happen, there's more to estate planning than who gets what upon your death. For example, you may want to create a financial power of attorney for protection in the event that you become incapacitated.
- Neglecting to update your estate plan: There will be times in your life when it makes sense to review and update your estate plan. For example, if you come into a lot of money, you'll want to review your estate plan and make changes as necessary.
- Overlooking ways to reduce your estate tax: The more money you have the more likely it is that your loved ones will get hit with estate tax. Fortunately, there are many ways to reduce your estate tax, such as by gifting money every year to your spouse.
When you avoid these mistakes, you'll feel better about the current state of your estate plan. You'll also feel better about what will happen to your estate and your loved ones after your passing.
If the time has come to create your first estate plan or alter one that you already have, learn more about your legal rights and the arrangements that make the most sense for you and your family.