Making estate plans can be a complicated affair. You could forget to include an asset in your will. You might fail to take advantage of an estate planning move that could better benefit your heirs. Fortunately, if you know about some estate planning pitfalls in advance, you might avoid them and create a better estate plan than you had first envisioned.
A lot of mistakes are simple omissions. Nonetheless, some of them could lead to serious problems for your heirs. Kiplinger explains what some of these common mistakes are and how to avoid them.
Failing to plan for long term care
Consider creating plans for your long term care and disability care while you can still work and put away money for retirement. As you grow older, you will likely incur greater health problems. Someday, you will likely need to leave the work force. Think about putting in place options like life insurance and disability coverage. Also consider how you may fund possible nursing home costs.
Not titling your ownership correctly
You have to be careful how you title your assets. Incorrectly titling your property can cause real problems when it comes time to transfer what you own to your children. For instance, if you have a trust, you want to title your assets so they belong to the trust. Conversely, you may want to keep property such as retirement accounts out of the trust.
Also, if you own a business, be careful how you title your business property. There is plenty of potential to mix up business and personal ownership. Check to see that you have not titled business assets in your own name.
Neglecting charitable giving
Chances are you have a cause you feel passionate about. If so, you have an opportunity to give to your cause through your estate plans. Some of these methods include setting up a charitable remainder trust or a donor-advised fund. You can give to your favorite church, university or activist group while boosting your tax benefits to the greatest extent possible.
Not having an organized plan
Many people do imagine what they want to happen in their older years or after they die, but they have not placed formal mechanisms, such as trusts or wills, to carry out their wishes. Without a will or a trust, the state will disperse your estate through its intestate laws, which may result in your money and property going to somebody that you do not want to receive from you. Formally organizing your estate wishes into actionable documents like a will may save your heirs a lot of stress and heartache.