Estate planning is a task that many people put off until it is too late. Even if you do not have much wealth, an estate plan can help prevent creditors and your relatives from squandering away everything that you worked so hard for and minimize probate court involvement. Without one, the government controls what happens to your legacy.
Creating an iron-clad estate plan is not easy and requires an in-depth assessment of your situation. Keep in mind that with or without an estate plan, your assets are subject to review by probate court. To minimize the likelihood of complications, try to avoid the following estate planning mistakes:
- Utilize all estate plan resources
You should not rely solely on a will to pass your assets and wealth to family members. A will helps to protect titled assets from mismanagement. If you have retirement accounts, savings, life insurance and other financial resources titled to beneficiaries, you should consider using other estate planning documents to shield them from creditors, certain life events and probate court.
- Make frequent updates
Outdated and old estate plans are not valid. Throughout your life, you may change your mind about who your beneficiaries are and what they are to inherit. If you do not update your estate plans and you suddenly fall seriously ill or die, the courts will abide by the most recent, valid plans available. This means that the wrong people could end up inheriting from your estate, instead of the ones you want.
- Include powers of attorney
Because people are living longer these days, there is a strong possibility of you becoming disabled before dying. To ensure that you can continue to live out your life as you want, your estate plans should include power of attorney documents. Though there are several types to consider, financial and healthcare power of attorneys are the most commonly used. An advanced medical directive (medical POA) allows you to retain some control over your medical and health needs to preserve your quality of life. A financial POA helps ensure that you properly take care of your financial affairs the way you see fit.
Estate planning is not just for the wealthy. Anyone who has a modest amount of assets or a legacy to preserve can benefit from having estate plans. Make those plans carefully to preserve your right to dictate your assets and beneficiaries’ fates.