Unless you've had a major health scare at some point, you've probably haven't thought much about what would happen to your financial assets if you were to pass away. Even if you've given the idea some thought, you may not have created an estate plan that accurately reflects your wishes. While you may know that you want to leave everything you own to your spouse and children, it is important to have an estate plan to ensure the government is also aware of your wishes.
However, creating a solid estate plan is far easier said than done. Here are the four most commonly committed estate planning mistakes so that you can avoid them at all costs.
Choosing the wrong executor
When you create your estate plan, you will need to choose an executor. In the event that you pass away, the executor of the estate plan will be responsible for ensuring your wishes are followed as you intended. Therefore, not only should the executor of your will be trustworthy, but he or she must be organized and able to put in the required time. Also, your executor should be likely to outlive you.
Choosing the wrong heirs
It is vital that you think carefully about who you want your heirs to be. Keep in mind that not everyone has the ability to wisely handle an inheritance. You want to choose heirs that will be able to use your financial assets properly instead of squandering them.
Not having a trust
If you believe that the heirs you want to choose won't be able to handle an inheritance appropriately, you should consider having a trust. You will place all of your financial assets in the trust and then you will be able to decide when your heirs will be able to access the inheritance. In fact, you also can decide for what purposes your heirs will be able to use the inheritance. A trust will protect your financial assets and your heirs.
Failing to update your will
The purpose of a will or estate plan is to ensure your wishes are followed when it comes to the distribution of your estate. Therefore, it is important that you update your estate plan regularly. Ideally, you should update your estate plan after major life events, such as marriage, divorce and birth.