When it comes to handling an estate after a loved one dies, families already face a lot of stress. You wouldn’t want to add to that stress by making common errors when planning the division of your estate in the event of your passing. Here are 5 common estate-planning errors to keep in mind.
Leaving the Division of Assets to the Family
Another way to say this would be that the worst plan you could have is no plan at all. If you leave any division of assets up to your surviving family members, you’re asking for the to get into fights over whom gets what and why. Expunge any possibility of creating extra tension among your family by outlining who gets what either in your will or a trust. If it’s clearly divided by you then they have no reason to fight with each other.
Selecting the Wrong Executor
Your executor has a big responsibility upon your death. He or she must carry out all guidelines you’ve put forth in your will, settle your estate and medical bills and other costs using your assets. It’s a time-consuming and drawn-out process so you’ll want to make sure you choose someone with the aptitude to perform all the necessary tasks. To avoid choosing an ill equipped executor and all conflicts of interest, you may want to appoint an executor outside of your family members, such as a trusted lawyer. A non-biased and professional executor will guarantee everything you laid out in your wills and trusts are fulfilled.
Holding Joint Titles
Whether you chose having jointly held titles to avoid probate or to ease the legal process of asset division, you may be creating more problems than you avoid. With joint titles, upon your death, the jointly held property all goes to the other title owner. This often creates an unequal distribution of assets since all other assets in your will get divided by probate. You could also face losing control of your assets depending on the joint holder. Your assets could fall subject to the other owner’s debts, division of assets in a divorce, or misuse of the assets.
Failing to Fund a Living Trust
After you create a living trust, you need to make sure it’s funded. It’s a common mistake for people to create their trusts and then forget to transfer all appropriate assets into the trust. A trust can only manage assets to which it holds the title so if your trust isn’t up to date, your family will have to endure the probate process to divide assets after your death even if you took the time to create a Living Trust Plan.
Forgetting to Update Your Will, Trust, or Life Insurance
Once you’ve created a will or trust, you need to spend time each year making sure it’s still up to date with the correct beneficiaries listed. With life insurance policies, you’ll also want to make sure in the event of your primary beneficiary’s death, you have a second one listed to avoid further complication for your family after you die. Too often families have to deal with extra paperwork, longer probate periods, and problems if all these documents aren’t kept up to date.
Your family will bear enough upon your death so make sure you ease their grieving period as much as possible with proper estate planning. You wouldn’t want to leave them stuck choosing your casket in a casket store with no way to cover all the funeral costs through improper planning. With poor planning, you also face doling out assets to family members who aren’t prepared to handle them. Though you can never plan your way out of every problem your heirs might encounter, with correct planning, you’ll at least lessen the stress over the process of asset division.