Having a comprehensive estate plan is crucial. Wills and other estate planning tools ensure your heirs receive your assets after you are gone. They can also help you minimize taxes when developed strategically.
While it is crucial that you have an estate plan in place, it is equally important that your plan is free of common errors and oversights. Kiplinger explains a few common mistakes people make, so you can avoid them in the future.
Not establishing guardianship for minors
In addition to providing assets to minor children in your care, your will can also establish guardianship in the event you and your spouse are unable to provide care. This is a crucial decision to make within your will, as the court will decide if there are no explicit plans made. Choosing a guardian allows you to rest easy knowing the person or family you choose will create a safe and loving home for your child.
Forgoing long-term care planning
Estate planning not only benefits your heirs after you are gone. It can also help while you are still alive and require long-term care. Nursing homes and assisted living facilities are extremely expensive, but long-term care planning ensures you can include funds within your estate plan to cover them. Some people even purchase insurance policies just in case long-term care ever becomes necessary.
Forgetting to update your plan
Your estate plan must change as your life does. That means you should revisit it after a new marriage, divorce, the birth of a new child, and any other significant life event. You should also review it if you moved from one state to another, as laws governing estate plans vary from state to state.
Even if you have not experienced any significant life changes, it is best to review your plan every three to five years. Along with wills and trusts, take a look at life insurance policies and retirement accounts to make sure the beneficiary designations are still accurate.