3 common estate planning mistakes

On Behalf of | Feb 22, 2020 | Estate Planning |

It’s a task very low on most Americans’ to-do lists. However, estate planning is crucial for many families, especially those who have a wide variety of assets. It can be daunting to set one up, as the process can be long and confusing. But getting an early start can be beneficial for keeping family possessions and finances in check.

At the same time, it’s also easy to make mistakes.

Mistakes to avoid

These are a few to be aware of:

  • Missing or incorrect beneficiaries: Some families may think that once they establish their wishes in their will, all is said and done. However, a will can’t always determine the beneficiaries of all of a person’s assets – such as retirement accounts or life insurance policies. To ensure specific people get these assets, estate plan owners must remember to name them as the beneficiary on those specific accounts.
  • Not funding a revocable living trust: These trusts can store assets and allow owners to move them around freely. When the owner dies, those assets either get held or distributed to beneficiaries based on provisions in the trust. However, people sometimes forget to put assets inside the trust, making it useless.
  • Naming a trust as the beneficiary of an IRA: The Secure Act removed provisions allowing retirement accounts to continue long-term, tax-deferred growth. And now, new rules require full IRA payouts after 10 years of the account owner’s death. Due to these circumstances, naming a trust as the beneficiary of a retirement account may not be ideal.

Preparation is half the battle

Life comes with unexpected twists and turns. That makes adapting to these circumstances crucial. But by understanding common estate planning mistakes, families can face unwanted surprises with ease and confidence.