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3 Common Estate Planning Mistakes (And How You Can Avoid Them)

Estate planning can a very complicated and confusing process. There are a lot of misconceptions and myths around estate planning, which is why it’s important to know the facts to avoid making any mistakes.

This article will help enlighten you on the common estate planning mistakes and how you can avoid them to save you and your family the headache and money in fixing problems and the unnecessary fees and taxes that go along with them.

1.   Not having sufficient understanding of how assets will pass upon your death

Most people believe that their Will controls how their assets will be handled upon death. However, a lot of people’s wealth comes in the form of life insurance accounts and retirement plans, which are assets that are outside the control of trusts and Wills. Specific assets, such as retirement plan accounts and life insurance, are not subject to probate, are outside the jurisdiction, and cannot be affected by a Will or trust, while properties and real estate you own are controlled by Wills and trusts.

How you can avoid this mistake:

When major changes happen in life, it’s always a good idea to review your beneficiary designations on your plans and policies. This ensures that your assets are passed according to your current situation and goals.

2.   Failing to protect a disabled beneficiary

Disabled children with no public assistance are almost certain to spend their inheritance on their personal and medical needs in just a few years. They may also be ineligible to get public assistance if you leave them the inheritance outright unless they spend it until it goes down to the statutory limit required by the state. If you leave the inheritance to another child (this usually occurs if the child promises you that he or she will help the disabled child), in the event that child dies, gets divorced, or sent to jail, it could result in the inheritance not being available to the disabled beneficiary.

How you can avoid this mistake:

Consider leaving your inheritance to a disabled beneficiary via a specially-drafted trust to ensure your beneficiary is protected and maintain their eligibility for public assistance.

3.   Relying on Beneficiary Designations

Beneficiary designations are a form of estate planning which is very simple and can’t manage contingency plans properly. If a major life change happens and you don’t update your beneficiary designations, proceeds may get jumbled up.

How you can avoid this mistake:

Trusts can control and manage how your inheritance or life insurance, including contingencies, will be distributed to your beneficiaries. You can also name a person who will distribute the inheritance to minor children and grandchildren on your trust.

When you want to preserve as much of your estate as possible for the next generation, an experienced estate planning attorney can present you with strategies that represent the best solution for your individual circumstances. At The Elder Care Law Firm, we are dedicated to helping our clients make arrangements that give them peace of mind while protecting their loved ones and their legacy. Please contact us today to schedule your consultation.