Developing a comprehensive estate plan comes with a significant amount of stress, worry and complexity. Individuals can be overwhelmed by the process and intimidated by the decisions facing them. When determining the distribution of assets and finances, however, there are numerous mistakes that can ultimately derail the entire process.
While every situation is unique, here are some common mistakes to avoid when developing your estate plan:
- You don’t understand your plan: Too often, individuals will be content with letting a professional handle all aspects of a complicated situation. Unfortunately, taking a backseat to your own estate plan means you might not fully understand what you have agreed to. Be certain to ask questions, seek clarification and pursue changes to ensure the plan lines up with your wishes.
- You make beneficiary designation errors: While the will covers a significant portion of your assets, there are certain factors that must be handled independently. For example, retirement accounts, annuities and life insurance policies are not bound to what it says in your estate plan. These are distributed based on the beneficiaries named in their own documentation.
- You don’t update your plan: As a complicated process, many individuals choose to view the estate plan as a one-and-done prospect. In fact, most financial experts agree that the plan should be reviewed every three to five years. Certainly, the plan should be revised after a significant life event. These events can be a change in marital status, the birth of a child or the loss of a loved one.
An estate plan requires an individual to come face to face with their own mortality. While this can be a difficult concept, it can be rewarding to gain the peace of mind knowing you’ve made decisions regarding who gets what when. From the concrete asset distribution of a will to the financial security provided by a trust, a comprehensive estate plan is a crucial aspect of your future.