When it comes to managing your wealth, estate planning is probably the last item on your list – if it is on your list at all. And, that’s understandable. No one likes to think about preparing for death, and people usually don’t know where to start, so they avoid this issue altogether. Studies have shown that 18% if people avoid discussing the matter because it makes them depressed.
Others, on the other hand, think that estate planning is just for the rich and famous and they don’t need to think about it. But, if you have at least one thing of value, such as a home, a car, or money in a bank account, then a sound plan can help you maximize the value of the estate you will pass to your heirs. Even if you just now plan on buying a new house, a will can still be beneficial.
Because making after-death arrangements is so difficult, this article will sum up some of the most common estate planning mistakes and tips on how to avoid them.
- Not Getting Legal Advice
One of the worst estate planning mistakes (besides not having an estate plan at all) is not meeting with a professional legal adviser to discuss your options. An experienced consultant, such as Russells, can provide you with estate planning strategies based on your needs and demands and help you lower your inheritance tax.
- Assuming that Your Financial Situation Is Too Simple for an Estate Plan
Most people think that their financial situation is rather straightforward, so they don’t need any legal documents to sort it out. The truth is that no finances are as simple as they seem – and even if they are, you should still consider creating a will to ensure that your wishes are known and respected.
- Procrastinating
“I’ll take care of it later,” is one of the most common excuses people are telling themselves when it comes to creating an estate plan. Unfortunately, the dictum “better late than never” doesn’t go well with estate planning because you never know what could happen. Consider starting the process as soon as possible to avoid trouble if you’re not longer in the position to make decisions.
- Not Making Gifts to Reduce Your Estate Tax
Few people know that by making gifts under your estate plan, you can reduce your inheritance tax significantly. For instance, gifts that account for more than $14,000 per year per spouse can be excluded from your estate tax. That way, you can leave more money to your heirs, as well as helping a cause or person.
- Not Planning for Disability
Your death is not the only reason you should consider having an estate plan in place. An unexpected disability can have a significant impact on your financial affairs. That’s why it’s vital to decide who will manage your finances, make health care decisions, or raise your children. Estate planning is the best way to ensure that your family will be taken care of if you are unable to do so yourself.
Studies show that all 93% of people claim that they feel overwhelmed by the legal terms of estate planning. Don’t let this hurdle stop you from ensuring a great future for your family. Remember, it’s your duty to protect the financial future of your loved one. Make sure that your family will maintain the same standard of living and ensure a secure future for them by creating a good estate plan.
