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You probably already know how important estate planning is. However, you might not be aware of how equally important it is to avoid common mistakes.
As explained by U.S. News & World Report, even thoughtful people can fall victim to common estate planning mistakes. Knowing about these missteps and how to avoid them is crucial for protecting your family after you’re gone.
Mistake #1: Choosing the Wrong Executor
The executor of your will is responsible for carrying out numerous tasks after you die. They must locate all assets, notify creditors, settle remaining debt, and distribute the remaining assets to heirs. You must choose a person who is financially responsible and capable of handling the numerous administrative duties. If not, mishandling of your estate can leave your heirs without their inheritances.
If you have a person in mind, have a discussion with them to ensure they are up for the task. You can also choose backup executors in case your first selection is unavailable. Along with friends and family, financial professionals and attorneys can also fulfill the role.
Mistake #2: Not Updating Your Documents
Once you have established your will and other estate planning documents, you must review them any time your life changes. Reviews should take place after new marriages, divorces, the birth of a new child, the purchase of new real estate, and any other event that impacts your assets. Along with updating your will, make sure your beneficiary designations on life insurance policies and retirement accounts are also updated.
Mistake #3: Not Organizing Important Records
Along with copies of your will and trust documents, you must also have other estate planning documents organized and accessible. This includes deeds and titles for real estate and other property, information on financial accounts, tax documents, and anything else your executor might need to manage your estate.
Even if no significant changes occur after creating an estate plan, you should still revisit it every three years or so. This can also help you identify potential errors or oversights and fix them before the plan goes into action.