They say anything worth doing is worth doing right. This definitely applies to estate planning. Every adult should have some type of estate plan, but one that is poorly thought out or full of mistakes will not pass on your wealth the way you want or protect you if you ever become too mentally infirm to take care of yourself.
Inexperience with estate planning and probate law can understandably lead to errors. Here are five common estate planning mistakes to watch out for.
Focusing only on the inheritance
Estate planning is about more than declaring who will inherit your assets after you pass away. You can also use estate planning tools to protect yourself in case of a catastrophic injury or illness that takes away your ability to make or communicate your own decisions.
Texas law permits estate planners to create an advance directive for this purpose. Your advance directive will contain instructions for end-of-life care and how far doctors should intervene to save your life — for example, whether you would prefer to be placed on an artificial respirator to extend your life. The details of the advance directive are up to you, based on your values and personal preferences.
Not lining up beneficiary designations
Whatever instructions you put in your will or trust for passing on a valuable asset like a bank account can be overwritten if you don’t keep your beneficiary designations in line with your estate plan. The bank will go with whomever you named as the account’s beneficiary upon your death, and there may not be anything the executor can do about it. To prevent this, you must let your bank know the terms of your estate plan.
Forgetting about taxes
You may be tempted to give some or all of your wealth to your children or other intended heirs while you are still alive to watch them enjoy it. While you clearly mean well, large gifts can trigger a large tax bill for the recipient. By passing on those assets through your will or trust, you usually save your heirs and beneficiaries considerable money and headaches.
Omitting funeral and burial instructions
You can include your wishes for your funeral and final resting place in your will. You can say if you prefer to be buried or cremated, what type of religious rituals (if any) you would like done, and other details. Without these instructions, your family will have to try to put together arrangements that might not fit with what you would have wanted.
Not having a backup executor
Most people choose their spouse, adult child or other trusted loved one to serve as the executor of their estate. But what if your chosen executor tragically dies at the same time you do or predeceases you and you do not get a chance to update your will? This is why it is important to name a secondary executor in case your first choice is unable to do it.
A comprehensive estate plan can meet your needs while you are still living and honor your legacy after you are gone.