Death is inevitable, but few of us plan for it.
In fact, over half of the US population don’t have a will or estate planning.
But even if you do have a plan in place, a few estate planning issues could undermine your attempts to be comprehensive.
Read on below to find out some of the most common issues and how to avoid them.
Failing to Plan
Of course, the biggest of estate planning issues is failing to plan at all. We plan for all sorts of eventualities, so it’s ridiculous not to plan for something that’s guaranteed to happen.
By failing to make a plan for your estate, you leave everything down to state law and chance. Although state law makes a basic provision for how your estate should be allocated after death, it’s a very simplified approach to a complex issue.
Invoking state law could leave your family without the provision you intended to make for them. It can mean cutting important people out of your will. Even worse, it could lead to familial conflict and bad blood.
If you don’t want your death to be a burden on your family, make an estate plan. This is even more important if you own a business, in which case many livelihoods could depend on your planning.
Not Keeping Your Plan Up-To-Date
This is almost as big as failing to plan at all.
If you let your estate plan fall behind your life, the results will be very unpredictable. As before, they could lead to a great deal of conflict within your family.
Most major life events should lead you to update your will. Marriage, divorce, death of a beneficiary, purchase of real estate – this list goes on.
Choosing the Wrong Executor
Your will is one of the most important documents you’ll ever put your name to. Part of building an effective will is choosing the right executor.
The executor of your will needs to be someone who you can trust to act in good faith and in line with your own judgment. Although it may seem right to leave this in the hands of your son or daughter, you need to think twice if they’ve shown poor decision making or an argumentative nature in the past.
Choosing the wrong person to handle your estate leaves a huge amount of uncertainty in your will. If you want your estate to find its way into the right hands, you need to be sure how it’ll be handled.
Letting Your Estate Be Hit by Huge Taxes
If you let them, taxes can shave off a huge portion of your estate.
Life insurance policies can be subject to high taxes upon your death, so your beneficiaries will lose out. Likewise, failing to use a spouse exemption or make gifts of your estate could leave it susceptible to further taxes.
These are just a few ways in which you’re throwing money away if you don’t manage estate taxes effectively. We can’t cover all the eventualities here, but discussing taxes with an experienced financial advisor can help you develop some strategies.
Thinking Ahead to Avoid Estate Planning Issues
Luckily, thinking ahead is the easiest way to avoid estate planning issues. And you’ve done that by reading this article! With our advice in mind, you should be able to avoid some of the more frequent pitfalls.
Be sure to follow our blog for more legal advice and guides!