When it comes to estate planning, you are never too young to get started. Your level of wealth also does not matter, as any person with some assets should have a solid plan in place.
Of course, creating a plan is really just the beginning. You must also ensure your plan is free from the following estate planning mistakes, which can throw your assets into turmoil after you are gone. Here are a few common errors people make and how you can avoid them.
Not naming powers of attorney
Powers of attorney can make financial or medical decisions on your behalf when you cannot. This is crucial should you become incapacitated by illness or injury. A financial power of attorney ensures your estate remains financially sound, while a medical power of attorney ensures you receive the type of medical care you desire when faced with a terminal condition.
Not reviewing beneficiary designations
Life insurance policies and retirement accounts require you to complete beneficiary designations upon creation. These designations specify who will receive funds from these policies and accounts after you die. If many years have passed since setup, check designations to make certain they still meet your needs. Keep in mind this information overrides information contained in other areas of your estate plan, such as your will.
Not funding trusts properly
Trusts are a great addition to estate plans, as they provide greater control over your assets and their distribution. Funding a trust means you must transfer legal titles of property and assets to the trust itself. With homes and cars, you must change the deed and registration to show the name of the trust. If you fail to do so, the trust will not hold those assets, and they will end up in probate court.
You should review your most recent estate plan every three to five years to make sure it continues to meet your needs. You should also update it after every major life event, such as a new marriage or the birth of a new child.