Planning your estate is all about preparing for the future. The last thing you want to do is make a mistake that will come back to haunt you and your loved ones years or even decades from now.
Unfortunately, making mistakes that can have devastating financial consequences is much easier than you may think. And while the mistakes may be simple, correcting them can be complex and costly.
Not paying attention to paperwork
Perhaps the most common error people make is being content with letting their estate planner do all of the work, then signing off on the documents without really knowing what they say. If you do not understand your role in implementing the plan, or do not follow up on your estate planner’s instructions to maintain the plan, you are setting yourself up for failure.
Failing to make updates
For example, you should update your list of beneficiaries every couple of years. When you ignore this task, you risk some of your estate going to a former spouse or leaving out a loved one who became part of the family after you signed the original paperwork.
In a similar vein, take care to update everything from ownership of assets to powers of attorney (both financial and medical). Coordinate your trust and retirement plans. Properly fund your revocable trusts.
Over time, tax and estate laws change. So do the circumstances of your life – births, deaths, divorces, marriages, your job status and your residence.
Each of these can have a dramatic impact on your estate planning strategy. Consequently, your plan should change, too.
When it comes to estate planning, a little knowledge goes a long way toward securing a sound financial future. As with any other important document in your life, you have to pay attention to details, keep yourself informed and be an active participant in making important decisions.