Now that you're an adult and have started building up some assets, you may have heard that you need an estate plan. Are you putting off getting started? If so, you're not alone.
Perhaps you don't like thinking about your own mortality. Perhaps you think that you're not old enough to need one. Or perhaps you have absolutely no idea how or where to begin. No matter what your reason for procrastination, there's no time like the present to get started. Today we'll share some common mistakes to avoid when it comes to creating and managing your estate plan.
First of all, you're not too young to draft an estate plan. Remember that an estate plan contains more than just a will. It should also include things like designated power of attorney and healthcare directives in case you end up hospitalized in an accident. This may not be pleasant to think about, but it's important to be prepared all the same.
When drafting a will, you may know exactly how you want to disperse your assets and possessions. But when leaving money, it is sometimes a mistake to leave it to friends or family in a lump sum. Recipients may be better cared for if you place it in a trust fund instead.
Another mistake to avoid is failing to consider estate taxes and how they will impact your loved ones. Some people are able to minimize the effect of taxes by "gifting" small portions of assets away while they're still alive.
Finally, make sure that you keep revisiting your estate plan and updating it as circumstances change. Changes in marital status, having children and significant changes in financial status are just some of the life events that may require you to update your estate plan.
If you still have no idea how to get started, don't worry. An experienced estate planning attorney can help draft a plan that accurately reflects your wishes and helps you maximize the legacy you will leave behind.
Source: Business Insider, "5 Common Estate Planning Mistakes To Avoid," Mandi Woodruff, Oct. 21, 2013