An estate plan helps assure that your wishes are carried out after your death or if you ever become incapacitated. For anyone who is at least 50, estate planning is essential. But common mistakes can undermine your planning.
An estate plan helps assure that your wishes are carried out after your death or if you ever become incapacitated. For anyone who is at least 50, estate planning is essential. But common mistakes can undermine your planning.
Basics
Your estate plan should include a last will and testament addressing how your property will be distributed and who will raise your children, a health care directive designating someone to make health care decisions on your behalf if you cannot communicate your instructions, a health care power of attorney designating a person to make health care decisions on your behalf if you are incapacitated and a financial power of attorney authorizing someone to handle your finances.
A living trust also reserves your assets for your family to avoid the cost and delay of probate.
Incomplete or incorrect plans
Inadequate plans are a typical error. Wills must address your current situation, such as a divorce or sudden infusion of wealth and the needs of your minor children.
Obviously, wills and other estate documents that do not comply with New Jersey law may be invalidated. These documents should be reviewed to address changes in the law.
Understanding your estate documents is important or they may not reflect your wishes or be fully utilized. For example, individuals often create trusts to allow a third party to hold assets such as a house but do not know how to use them.
Investments
Assure that you still own any investments that you intend to leave to your beneficiaries in your estate planning documents. Otherwise, your beneficiaries may need to purchase them at higher current prices. This purchase could even take all or most of your estate assets.
Beneficiaries
Keep your beneficiaries current on insurance policies, retirement plans, IRAs, and annuity documents. Beneficiaries named on these plans override anyone named in your will. Assets that are not updated may go to an unintended beneficiary such as a former spouse.
Name contingent beneficiaries. Otherwise, assets may undergo probate if the primary beneficiary dies. Joint ownership of bank accounts can expedite estate resolution.
Understand who will inherit your assets.
Some individuals, such as minors and irresponsible adults, may not handle an inheritance wisely. A trust helps assure that responsible individuals manage the inheritance. Consider whether your heirs are able to deal with a major asset such as a house.
Information
Your family members and executors face unnecessary complications if they are unaware of where your estate documents are kept and know about your assets.
Create a digital accounts access guide so that your relatives and executor can access your bank accounts, credit cards and other important information.
