Problems with your estate plan may not become apparent until it is too late to fix them. Here are some common pitfalls:
- Failing to plan for large expenses such as long-term care. About 70% of us can expect to be completely incapacitated for some period of time before we die, so failing to have a “disability plan” in place can severely limit our options.
- Failing to update your estate plan, including beneficiary designations on bank accounts, investment accounts, retirement accounts, and insurance policies. We recommend reviewing your estate plan at least annually, and updating your plan as necessary.
- Failing to take steps to avoid family strife. Making your intentions clear is the first step. You can also build incentives (and disincentives) into your estate plan that can head off courtroom battles.
- Putting your kids on title to your stuff during your lifetime. Not only might you be setting your loved ones up for capital gains taxes that could have been avoided, you may be putting your assets at risk. Your kids’ creditors or ex-spouses (which hopefully they will never have) could get their hooks into your assets while you still need them.
Estate planning is serious business, and you are better off doing it right. Usually, that means working with professionals who will charge for their services. Shop around until you find advisors who know what they are doing, will help you devise a workable plan, and are worth their fees.