When many people hear the words “estate planning,” they assume it’s only for the wealthy. But this is not the case because everyone can benefit from an estate plan. And when creating one, you’ll want to avoid some common mistakes.
Before we look at these mistakes, let’s review what estate planning is designed to achieve. Basically, an estate plan allows you to pass on your assets the way you want. But you can also specify other actions, such as naming someone to take care of your minor children if they were no longer there. There are several key documents involved in creating an estate plan, including a will, a trust, a financial power of attorney, and a medical power of attorney or health care directive.
Now, let’s consider some estate planning mistakes:
Not communicating your plans – You will need to tell your family who you have chosen as your executor (the person who will administer your estate) and who you have appointed as your trustee (the person who will manage the assets of your trust). (You can also choose a trusted company to handle this duty.) And to avoid unpleasant surprises when your estate is being settled, consider letting your children or other close family members know who will get what.
Not reviewing your plans regularly – Once you’ve created your estate plans, don’t forget about them. Over time, your personal situation may change: you may remarry or have new children. Your interests may also change; you may become deeply involved in supporting a favorite charity. Given these and other potential changes, you’ll want to review your estate plans from time to time to see if they need to be modified.
Do not update beneficiary designations – From time to time, you may want to review the beneficiary designations in your life insurance policies, investment accounts, and retirement assets. As mentioned, changes in your life, such as remarriage and the addition of new children, can affect your beneficiaries. Beneficiary designations are powerful and can even replace your will, so you’ll want to update them as needed. Also, if you have a 529 education savings plan, you’ll want to name a successor owner — someone who can take over your 529 if you die.
Not re-registering assets placed in a trust: A living trust offers you many potential advantages, including the ability to avoid the time-consuming and highly public probate process when it’s time to liquidate your estate. However, just establishing trust, by itself, may not be enough; you may also need to re-register assets, such as your investments, so that they are officially owned by the trust, not you. This is essential for the trust to work the way you want it to.
Here is another error: not getting the help you need. Estate planning can be complex, so you’ll want to work with an attorney and possibly your financial advisor and tax professional as well.
By avoiding key mistakes and working with a qualified team of professionals, you can create and maintain an estate plan that will help you leave the legacy you want.
Jennifer Barrett (AAMS) is a local financial advisor at Edward Jones.
225-612-0413 | jennifer.barrett@edwardjones.com
Edward Jones. SIPC member.
Edward Jones, its employees and financial advisors are not estate planners and cannot provide tax or legal advice. You should consult your estate planning attorney or qualified tax advisor regarding your situation.