Estate planning is a task that many adults overlook, but it’s one that’s critical. There are many things to consider when you’re creating your estate plan.
Creating your estate plan will take time, but it isn’t something you should rush through. Making mistakes as you’re doing this can have a negative impact on your beneficiaries and heirs. Avoiding mistakes can help your loved ones to get the assets they’re due as quickly as possible.
Mistake #1: Including payable on death accounts in the estate plan
Certain financial accounts, such as checking and savings accounts, are governed by the payable on death designation you set when you opened it. Never include these accounts in the estate plan because problems can arise if the payable on death document and estate plan don’t match precisely. Remember, the person who you name as the designee can access the account after you die, but they can’t get it before then.
Mistake #2: Failing to designate power of attorney
Part of a comprehensive estate plan is naming individuals to take care of certain things if you become incapacitated. You need a power of attorney for finances and one for health care. The individuals you name will make decisions for you when you’re unable to make them for yourself. The person who has the health care power of attorney can’t go against your advance directives, so be sure you have that document set if there are aspects of your health care you feel strongly about.
Mistake #3: Never updating the estate plan
You should check your estate plan to ensure it still reflects your wishes. Check it after major life changes, such as getting married or divorced. You also need to review it if someone named in the estate plan passes away. If no major life changes occur, you should go over the plan every three to five years.
Ensuring you have a comprehensive estate plan is crucial so you can rest assured that your loved ones are cared for when you die. Working with someone who knows your wishes and who’s familiar with the law can help you to get this done as quickly and efficiently as possible.