One-third of an average person’s life is spent working. Majority of people around the world work to support themselves and their families.
Considering the time, effort, and resources it takes to build up assets and create savings, it only makes sense to have a plan for it all if anything goes wrong.
Planning is an integral part of an adult’s life, whether it be planning for a new family house or a trip to the nearby countryside, planning ahead saves you from avoidable blunders and unnecessary hassles ahead.
Yet even the most functional and responsible adults fail to plan for one of their most important life events – what will happen to their assets after they are gone.
Gone are the days when estate planning was associated with wealthy people with huge assets to pass on.
A careful estate plan has nothing to do with wealth and everything to do with providing ease for your loved ones after you are no longer with them, and thus it should be on the to-do list for every adult.
When it comes to creating an estate plan, creating one that avoids common mistakes and errors is highly important.
After all, the entire idea behind an estate plan is to provide ease for your loved ones, and an erroneous estate plan may induce more stress than comfort.
Here are some ways to avoid challenges when implementing an estate plan.
1. Understand Your Plan
Attorneys believe that a high number of estate plans they develop aren’t fully implemented because of a lack of understanding on their clients’ part.
A simple Google search can help you find a lot of relevant information regarding estate planning online – not only will you find detailed blogs but also practical and legal experiences of people just like yourself.
Most people make the faulty assumption that hiring an estate planner is enough for a successful estate plan implementation. An estate planner provides invaluable services but that alone is not enough.
It’s part of an estate planner’s job to make sure that you understand how the plan works for you and your beneficiaries, also, how it’s maintained and implemented.
But it’s also a part of your job to understand all these things to the best of your ability to avoid any future inconvenience.
Follow the advice listed below to make sure that you understand your estate plan:
- Ask your estate planner to walk you through the legal documentation
- Ask questions about anything you don’t understand
- Take notes of your discussions with the estate planner
- Educate yourself about estate planning through the Internet
2. Intestate Succession
Another situation that arises from an incomplete estate plan is intestate succession. A person who dies without leaving behind a valid will is called an intestate.
The probate court manages an intestate person’s estate through the intestate succession statute. The major undesired aftermath of intestacy is that people other than your beneficiaries may receive your assets.
Often, people make the mistake of not revising their estate plans after they move states. This results in an estate plan that may not fulfill the current state’s legal requirements, which may result in intestacy.
Always make sure to revise your estate plan after a move to make sure that your plan is compatible with the law of the current state you reside in.
3. Keep Your Estate Plan Up to Date
Many events and life circumstances can leave an estate plan in need of a revision. Some of them are listed below:
- Death Of a Spouse or A Parent
- Death Of a Beneficiary
- Changes In State Laws
- Adoption Or Birth
- Family Conflicts
- Addition/Reduction in Assets
- Falling Out with A Beneficiary
Most of the above-mentioned points result in one major issue – outdated beneficiary designations.
Assets inheritance goes far beyond what’s written in the will. In fact, certain assets have separate beneficiary designation forms which signify who will inherit them.
Outdated beneficiary designations may cause your assets to go to an ex-spouse, a deceased parent, or a beneficiary you had a falling out with.
All of these are highly problematic scenarios with the potential to cause a lot of family unrest in an already stressful event.
Make sure to update your beneficiary designations after every major life event to be content with the distribution of your hard-earned assets.
4. Make It Simple for The Executor
One of the most common mistakes made by the owner is the lack of comprehensive assets documentation left behind for the executor. This is also why some estates take a lot of time and money to settle.
Owners tend to know the details of their assets and the whereabouts of their necessary documents. The same cannot be said for the executor.
Most executors are lost when it comes to the details of the assets and liabilities, and that gives way to a lengthy and unnecessarily complicated estate plan implementation.
Make sure to streamline and document your asset details as you age to make it easy for the next person in case of your disability or death.
It will also put your mind at ease at the thought of having everything in order and ready for implementation, which can avoid your beneficiaries the lengthy and drawn-out legal battles.
5. Fund Living Trusts
Probably one of the costliest mistakes a person can make is to create a living trust without giving legal title to their assets.
The purpose of a trust is to manage assets in an efficient manner and to avoid probate, but a living trust has no value until you transfer its legal ownership.
Too often, the necessary steps to transfer legal titles are not taken in time, which results in assets going through probate.
Make sure to fund a revocable living trust to avoid all these issues.
An estate plan is created with the intent of leaving your loved ones in a good state and smooth distribution of assets among them after you are gone. But too often people fail to plan it all together and even when they do, it’s riddled with common errors and mistakes that may even render the document irrelevant and inapplicable. Follow the advice given in this article to create efficient and functional estate plans that are easily implemented when the time comes.