As you’re going through legal document, it’s important to sit with a professional and go over the options that will benefit you and all beneficiaries. Here are four harmful mistakes to avoid in estate planning—don’t finalize anything in the will before you’ve made sure you entirely avoided these errors.
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Not Planning on Time
When you don’t plan your estate at all or before something drastic happens, you’ll end up missing out on giving your assets to your family members and friends. Start your estate planning early; that way, you’ll know what you need to document in each stage of your life, especially if you plan to have a family later or buy property. Having a list of all your assets will help you execute the estate later and avoid any problems.
Listing Only One Beneficiary
When writing your will, you’ll create a list of people who can take on your accounts, properties, and guardianship of any children. The people who will potentially acquire these assets are called beneficiaries. However, some testators select only one beneficiary. However, some beneficiaries may not have the ability to take on particular assets due to financial situations, age, or other areas that negatively affect them. Therefore, when you’re fine-tuning your recipient list, try to select more than one beneficiary so that you have a secondary set in case the primary beneficiary doesn’t work out.
Not Considering Taxes
The last thing you want is to worry about taxes. The best way to prevent this worry is to speak with an accountant who can keep all your taxes in order. You can also talk with an auditor to help potential heirs avoid paying huge taxes on their inheritances. They won’t get taxed at the federal level upon the execution of your will or trust, but the state in which you live likely will, and they need to be prepared when the day comes. Your accountant will works with you on recording taxes on all assets, so you won’t need to worry about problems.
Not Updating Often
You can start planning your estate at any age, but you’ll need to update it when you enter each stage of your life. However, updating wills and trusts often isn’t easy, so a good rule of thumb is to do so only when a life event happens, such as getting married, having children, or purchasing new assets. Even updating your will every three to five years can make a huge difference in how your assets build up and get distributed once you’ve passed on.
As you plan your estate, familiarize yourself with these harmful mistakes to avoid in estate planning. If the process becomes difficult, you can work with an attorney to streamline the process until you have a finalized estate.