Overthinking your estate plan is understandable. You want to make sure that you’ve covered everything and nothing is left out. It’s great that you’ve gone to great lengths to ensure a thorough estate plan. In addition, there is a lot that goes into estate planning sometimes. However, did you know that you can over-plan and make your estate plan overly complicated?
Being thorough is good but having an overly complicated estate can cause problems just like an insufficient estate plan can. Here are common errors made in the estate planning process:
- Mismanaging their living trust. Trusts can be beneficial in reducing estate taxes, but they have one key weakness: you must fund them. Without proper funding, they become pointless. That means that you must transfer the titles from your name to the name of your trust to fund the trust.
- Naming two beneficiaries for the same asset. Splitting inheritance becomes dicey when one beneficiary wants to keep the property but the other wants to sell it for its value. Experts recommend thinking harder about who should receive the property and leaving it to one beneficiary through a transfer on death deed. A transfer on death deed may make it less likely your heir will have to go through probate to receive their inheritance.
- Failing to update the estate plan. Maybe you got married or divorced and forgot to update the beneficiaries. Not updating the beneficiaries in your estate could lead to your property going to the wrong person, like your ex-spouse.
While it’s important to have an estate plan, it’s almost equally important to avoid overlooking important details like funding a trust or designating the proper beneficiaries. You wouldn’t want all your time creating an estate plan to be for nothing. Is there anything that you think you may have missed in your estate plan?