While most of the people are aware of the significance of estate planning, many fail to work out a sound estate plan and make well-thought-out arrangements for their heirs. According to a recent survey, 4 out of 10 people don’t have in place the critical documents that will take care of their financial matters if they become incapacitated. Flaws in financial planning could leave you vulnerable to a number of financial problems in future. Following are some of the common estate planning mistakes you should avoid:
Misunderstanding the plan
Most of the people don’t really try to fully comprehend technicalities associated with estate planning. A high percentage of plans are not fully implemented for people don’t understand the plan. Before working on any document, make sure you understand the fundamentals of how the plan works, what should be done to implement and maintain the plan, and how it would work for your loved ones. You don’t need to consider overly complicated and legal aspects of a plan, but you must work on basics and develop an understanding of how things really work.
When creating a financial plan for your future, regardless of your degree of wealth, always consult a financial planner and attorney who specializes in estate planning. Insist your financial planner take time and walk you through the plan and important documents. It would be great if you take notes during the planning process. Document your key decisions to keep things streamlined in the future.
Outdated beneficiary designation
It is extremely important to update beneficiary designation. Failure to do so means your assets might go to your siblings or parents because this is what the documents say when you first opened the account. In some cases, the asset can go to unintended beneficiaries. Sometimes, someone is inadvertently excluded because they become a part of the family after you signed a document. Therefore, don’t forget to review your beneficiary designations after few years or after every major life change.
Not updating power of attorney
An estate plan must include powers of attorney. In most of the cases, a person either doesn’t have these documents or hasn’t kept them up to date. Make sure you have all the documents and that they contain the most relevant and recently updated information.
If anything ever happens to you and you are unable to run your financial matters, a power of attorney will give someone you trust the power to manage your financial matters and make important decisions on your behalf. If you haven’t given someone the power of attorney, the court will take complete control of your finances.
Not updating the plan
Financial plans can become obsolete and irrelevant after a major event in your life. An estate plan needs to be updated from time to time so that it remains relevant to your current situation. Get in touch with your financial planner after major life changes such as divorce, marriage, birth, death, etc. There are so many variables such as job status, your net worth, residence, and the composition of your estate, etc. that will require a review of your existing plan.
Simply put, take estate planning seriously no matter the volume of your wealth; consult an experienced and reputable financial planner to streamline your financial matters from estate planning to tax planning.
Kewcorp financial provides financial management services to individuals and businesses. We specialize in financial areas: estate planning, retirement, investment, insurance and tax planning. Our objective is to help people make considerate financial decisions and achieve their future goals. Feel free to contact us if you need our financial expertise!