No matter what size your estate is, a comprehensive plan that deals with a wide variety of issues is vital. Estate planning not just about making a will—your plan should address issues that might occur before your death as well. People tend to make some common blunders when they plan their estates, so learn from them and make it a point to create and manage a plan that you understand and that is complete. Read on to find out more about some blunders that can be easily avoided.
Creating a great estate plan and but then never updating it – Plan to revisit your estate plan at least on a yearly basis and more often when certain events occur. The following events should prompt a phone call to your estate attorney at once:
- Births, deaths, marriages, divorces, and adoptions. You may not, for example, want your ex-spouse to be the beneficiary of your life insurance policy anymore.
- Attaining or losing property such as real estate, vehicles, boats, and other items of value. Bequeathing artwork that was stolen or lost to a relative should be addressed.
- Businesses sold or started, changes in business partnerships, etc.
- New bank accounts or changes to investment accounts, stocks, bonds, currency holdings, etc.
Neglecting to address tax law changes – Nearly every year the IRS makes changes in the tax laws and taxes play a big role in investments and assets. If your plan includes ways to make the most of tax breaks, review the plan with your attorney on a yearly basis.
Failing to designate who has the power of attorney – Some people assume that the power of attorney is only meant for special and temporary circumstances, but there are many types of powers of attorney. For example, a medical directive appoints the power of attorney to a person who can make healthcare decisions for you if you are unable to do so due to incapacity. Financial powers of attorney appoint someone to handle your financial affairs if you become incapacitated.
Creating a great plan that leaves you completely perplexed – Putting too much faith in the hands of any financial or legal advisor is unwise. Highly complicated issues should be explained and you should never sign on to a plan in which you don't understand the implications. Do some general research on your own, take good notes when discussing issues with your professional, and don't hesitate to have issues explained to you in full.
For more information on estate planning, contact an attorney.