Avoid Common Estate Planning Mistakes

Estate planning is not reserved for people who have a lot of money or assets. This is a common misconception which often leads to inaction on the part of people who feel they do not qualify or need an estate plan. To put it simply, estate planning is basically making arrangements today to ensure your family doesn’t have the added responsibility of managing your property or finances after your death. To avoid making common mistakes, consider the following tips to get your affairs in order. 

• Understand the need for a plan. The first mistake people make has already been mentioned at the beginning of this article. If you don’t have an estate plan, you must know that any arrangements you fail to make prior to your death will fall on the shoulders of those you love the most at a time when they least equipped to be making important decisions.
• Know what estate planning entails. Once you understand the need for an estate plan, the next step is knowing what is involved in the process. You will have to draw up a will, decide on a power of attorney to handle your affairs if you are unable to do so, and a living will or medical power of attorney to make sure your wishes are heeded regarding end-of-life situations.
• Think twice before initiating joint ownership. People often decide the best way to pass assets to their heirs is by adding them as a joint owner. The possible negative consequences of joint ownership often outweigh the benefits. Not only do you lose absolute control of your property or assets, you run the risk of losing your assets should the person added fall on financial difficulty.
• Saving the best for last is not always the best option. When it comes to leaving money or other assets to your heirs, there are certain benefits to giving away some of your money while you are still here to see them enjoy it. You can gift up to $13,000 per year ($26,000 to your spouse) tax free plus contribute to medical or educational bills if paid to the institution itself.
• Enlist the help of a proven professional to help set up your estate. There is a lot to consider when setting up an estate, much of which is not necessarily easy to understand for a layman. There are Federal and State laws that must be considered as well as tax consequences that may turn a good dead into a financial hardship for your heirs. Before you begin planning your estate take the time to research and find a professional that can help you navigate certain areas where you lack familiarity.

Depending on the size of your estate, a little planning and forethought can make life easier for your family during a difficult time.  Take the time to make your wishes known, legally and rest assured that your financial affairs are in order.