When done correctly, estate planning provides a level of confidence to a family. It ensures the assets of a person go to the designated beneficiaries and that money is not lost in the probate process.
As with any area of law, though, common mistakes exist that have the capacity to foil the best of intentions.
Avoidable estate planning errors
According to an article in Forbes, a number of estate planning mistakes commonly show up no matter the size or wealth of an estate. Many of these missteps have simple solutions. A survey of attorneys showed that many clients failed to properly implement a sound plan. This happened in many cases because clients failed to fully understand the specifics of the plan. Therefore, clients should take the time to understand the estate plan well enough to implement it. The designation of beneficiaries also remains a common area of failure. Certain assets, such as retirement accounts, annuities and life insurance, have separate beneficiary forms that take precedence over a will. The simple solution is to review beneficiary forms every few years.
Common estate planning pitfalls
Kiplinger illustrates what can happen with an inherited gift that has negative consequences. In the case of the gift of a house, it is best to consider the consequences of placing restrictions that could result in expensive legal proceedings. Also, on the always important issue of beneficiaries, it is important that people keep track of deaths among friends and families. In the case of dual beneficiaries, the death of one could result in imbalances of wealth distribution to one side of the family. In general, a well-constructed estate plan is an ongoing process.