Whether you have few assets or a sizable estate, one step you could take that would benefit your loved ones in the long run is executing a comprehensive estate plan that will provide for their needs and make your wishes unequivocally clear. However, there are some pitfalls to avoid when estate planning.
Pitfall 1: Failing to name the proper beneficiaries
Certain financial accounts such as savings accounts, retirement accounts and life insurance policies have a beneficiary named to them. The beneficiary receives the account assets when you pass on. However, if there is no beneficiary named at the time of your death, it could lead to a costly court battle to determine who should receive these assets. Also, if the beneficiaries are minors when you pass away, they may not have the legal authority to control an inheritance, depending on state law.
Pitfall 2: Not funding your trust
Trusts are a popular estate planning vehicle, and there is a different trust to meet just about any of your estate planning goals. However, something all trusts have in common is that they need to be funded. This means your personal assets must be retitled or otherwise transferred to the trust. Assets left out of the trust at the time of your death may be subject to probate, as there will be nothing in the trust to inherit.
Pitfall 3: Leaving no estate plan at all
Thinking about your end of life wishes and what you want done with your assets when you pass on can be an overwhelming and emotional process. However, estate planning is about more than just executing a will or trust. Living wills and a health care and financial power of attorney can outline what kind of end-of-life care you want, as well who you want to make decisions on your behalf if you become incapacitated. Not only does estate planning give you peace of mind, but it is also of comfort to your loved ones who will have clear instructions on what your wishes are.
Get your affairs in order before it is too late
One of the greatest gifts you can give your loved ones is a clear, comprehensive estate plan. If you want more information on estate planning you will want to seek legal advice, which this post does not provide. Estate planning attorneys in Staten Island understand your concerns and may be a useful resource.