We all know having an estate plan is good for our finances, good for our heirs and good for ensuring our intentions are met. So, we set-up a plan and lock it away.
But what many don’t realize is that estate plans should be reviewed regularly for any changes or updates that may need made.
Oftentimes, situations change, intentions change and we may even forget how we initially set up our estate plans. Take time to review and update your plan when necessary.
Even the most up-to-date plan may have undesired consequences if it's not put together carefully.
Beware of these 4 common flaws in estate plans:
- Not coordinating beneficiary designations with your overall estate plan. Certain assets such as IRAs, other retirement accounts and life insurance proceeds are not controlled by your will. At your death, they will go to the beneficiaries you named either when you opened the account or when you last updated the account's beneficiary forms.
- Not making sure assets are titled correctly. Property ownership must be tailored to your overall plan. Assets held in joint tenancy with rights of survivorship, for example, pass to the surviving joint tenant even if your will says something different.
- Not planning for loss of ability to make decisions. Who will make important financial and medical decisions on your behalf in the event of a sudden illness or incapacity? Durable powers of attorney for financial and health care provide direction to your agent or attorney-in-fact in the event you cannot make decisions for yourself.
- Not naming or updating a guardian for minor children. If you don't decide and formalize your wishes in your will or trust, a court will. Review your guardianship provisions regularly so your children's well-being doesn't end up in the hands of a court.
One final tip: meet with an experienced estate planning lawyer or professional. An experienced professional can provide a wealth of information and guidance, from tax planning to helping avoid large estate taxes to finding a gap you may not have considered.