Celebrities aren’t the only ones who fail to have a will or a trust; they just make the headlines. Four common mistakes of estate planning follow:
- Neglecting to have a will. Without a will, the state will determine who will receive your assets after you die. Estate planning is critical if you have millions of dollars or just a modest estate. If you want a special family member or charity to receive something, it needs to be written in a will.
- Failure to set up a trust. If you only have a will and not a living trust, your estate plans are not private. A living trust spells out who is entitled to your assets and how they’ll receive them, without going through the public eye of probate court; it will also avoid the time and expense involved with going through probate. A living trust also offers some estate-tax benefits by letting you use the full federal estate-tax exemption.
- Neglecting to update estate plans. A will and trust should reflect your current wishes; forgetting to amend these documents after a significant event could leave someone you love empty-handed. Amending your documents is critical after a change in your marital status or a new addition to the family. You want your “last will and testament” to be the right one.
- Forgetting to plan for disability. Estate planning is not only about carrying out your wishes after you die. A good estate plan also takes care of you during your lifetime. Power-of-attorney documents will protect you if you become incapacitated, giving your loved ones the authority to make medical and financial decisions for you when you aren’t capable. Without proper documents in place, no-one automatically has the legal right to speak or act on your behalf.
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