5 things to avoid when creating your estate plan
Everyone needs an estate plan, even people who don’t have a lot of assets. This is because the estate plan does much more than just naming who is going to get what assets. You can also set provisions for who will care for children and pets, as well as who is going to make decisions for you if you are incapable of making them for yourself.
Once you take the time to create your estate plan, you don’t need to find out there is something you missed that is going to have an impact on what happens. Instead, you should avoid making these five estate planning errors:
#1: Naming the wrong executor and proxies
The executor of your estate plan is the person who is going to make sure that your assets are distributed as intended. This person also handles other aspects of the estate, which includes paying creditors. You should find a person who can think clearly and objectively despite the fact that they are doing their duties after you pass away.
Your proxies are two other important designations. You need to give someone power to make health care decisions for you and someone to handle your financial affairs. These powers of attorney designations would only come into the picture when you can’t make decisions for yourself. You should make sure that these two proxies know what you want and will be able to stand up for your wishes.
#2: Not using trusts
Trusts are an important tool for many estates. Some trusts, such as special needs trusts, have specific purposes. You should evaluate the different trusts that might be appropriate for your estate plan and determine which ones you will establish. Trusts can help your loved ones to get assets without having to go through the probate process. Even life insurance can be placed in a special trust, known as a life insurance trust.
#3: Failing to update your will
You need to update your will when anything major changes in your life. When you have a new child or go through a divorce, you need to check your will. Even if you don’t have a major life change, it is a good idea to review the will once per year to ensure it still reflects your current wishes.
#4: Forgetting to plan for minor children
If you have minor children at home, you need to include guardianship information in your estate plan. This will make your wishes known about who you want to raise your children if you pass away. Guardianship designations could keep your children out of foster care.
#5: Not ensuring the estate plan is enforceable
You have to make sure that your estate plan meets the requirements set forth by Florida laws. By doing this, you reduce the chance that your loved ones will have to battle things out in probate court. Having everything set up properly could save them time and money.