No matter your age or the number of assets in your possession, creating an estate plan is a must. You should also take the proper steps to create a legally binding and enforceable plan, or your estate may end up in probate court. To sidestep this often time-consuming and costly process, U.S. News & World Report offers the following advice.
Neglecting beneficiary designations
If you have a life insurance policy or retirement account, you probably have a good idea on what to do with the proceeds after you’re gone. However, your wishes can’t simply be written into a will when it comes to these items. You must also fill out the accompanying beneficiary designations, which state who receives what percentage of proceeds. Beneficiary designations trump all other estate planning documents. That means if your will and your designations differ, the court will abide by the latter.
Not funding your trust
While trusts are a useful estate planning document, if you fail to fund your trust your assets could be in jeopardy. Once the trust is created you must also change title and deeds to reflect ownership by the trust. If you fail to do so, these items will be dispersed at the discretion of the court. If you want to set up a trust, having a seasoned estate planning attorney by your side is recommended to ensure the process is correct.
Forgetting to review your estate plan
Even a well-made estate plan will need reviewing from time to time. You should go over your plan every three to five years to ensure it still reflects your wishes. You should also review your plan after any major life event. This can include things like a divorce, new marriage, or the birth of a child. Also, give some thought to executor or trustee you initially choose to ensure the person is still up to the task. You can also select a back-up just in case.