A Brief Guide to Estate Planning

Common Mistakes to Avoid and
Why You Need it to Protect Your Family

Complete Guide to Estate Planning

Owning an estate does not mean being the owner of vast land or a massive property. Everything under your ownership— from car to home and furniture to a savings account— is part of your estate. Estate planning is about delegating the things you own after your death to the people and entities you care about the most. Family, charities, friends, even pets need this crucial document without mistakes and ambiguities to ensure no disputes occur at the time of asset distribution.

A Brief Guide to Estate Planning

Why Is Estate Planning Important and When Should You Do It?

The future is never certain, so a level of planning for unforeseen events is always a good idea. When it comes to estate planning, individuals use it to arrange the management of assets during their lives in the event of incapacitation or death so their wealth can be transferred to loved ones.

Estate planning is especially important if:

You have children

As the family’s patriarch or matriarch, planning for your family’s prosperity is probably top of mind – as it should be. While adult children likely will not need financial assistance once you pass on, making sure they are not left with a financial burden is essential.

You have philanthropic goals

In some cases, a person has plans to donate part of their estate to a charity. It may be preferable for tax purposes to leave assets for a charity or non-profit in a Traditional IRA.

You are preparing to be incapacitated due to illness

You can never plan far enough ahead to anticipate an illness. However, suppose you know your health could significantly decline. In that case, you should draft documentation such as a financial power of attorney to appoint someone you trust to make financial decisions when you cannot.

You have concerns regarding the probate process

One of the lesser-known reasons for estate planning includes minimizing delays, losing privacy, and expenses during the probate process.

Mistakes to Avoid During Estate Planning

Estate planning can be complicated, so errors can easily occur. Make sure you avoid these common mistakes:

Not being actively involved in the planning process

Many people leave everything on their estate planning attorneys and are not actively involved during the planning process. Many times, they sign the plan without sifting through and understanding its provisions and clauses. Know what you are signing and check that your wishes are clearly understood.

Asset ownership not up to date

You may not realize that there are some assets solely in your name and others you share with spouses, children, or friends. The ownership of these assets should be re-evaluated before finalizing your estate plan. Without updating and changing (where needed) the ownership of your assets, you might make it difficult for your successors to inherit them.

Beneficiary designations are not updated

Beneficiary designations for different asset forms override the will. For instance, if the beneficiary form of your vehicle has your ex-spouse’s name, it will go to them even if you nominate your children as beneficiaries in the will. Therefore, make sure beneficiary designations in your estate plan are updated and in line with your will.

Failing to a fund living trust

A living or revocable trust allows people to avoid probate and keep investment management flexible. It also helps with disability planning and readily passes on to beneficiaries upon the trust owner’s death. However, many people fail to fund (or transfer all the assets) to the trust. A poorly planned revocable trust can subject your assets to the probate process.

Trust and retirement plans are not coordinated

Without assigning the right trust or individual (defined exactly with legal jargon), you might not be able to retain tax deferrals on an individual retirement account and other retirement plans.

Power of attorney is not updated

You must legally name two powers of attorney in your estate plan to take care of your financial and medical matters. These authorizations should be updated regularly so the right people can take care of your will and estate if you become incapacitated.

Failing to re-examine the plan

An estate plan should be re-examined and updated accordingly after every major life-changing event within your family (marriage, divorce, death, birth, and change in net worth or residence). Not updating the estate plan considering these events can render it outmoded by the time it goes into effect.

Peak American Financial Group Can Support Your Estate Planning

Peak American Financial Group has been serving retirees and those near retirement age with expert financial help since 1994. Our team of experienced, courteous, and receptive advisors can also help you with your estate plan. Contact us today to find out how we can assist you with your financial needs.