Estate planning can be a fairly involved process, depending on the size of your estate, your goals, or complicated family dynamics. For others, estate planning can be a relatively straightforward process. In either case, it is possible to make mistakes.
A recent article in the Athens Banner-Herald covered common mistakes people make when approaching estate planning. Among them are selecting an improper trustee, executor, or guardian; improper beneficiary selection, poor disposition of personal property, and failure to elect powers of attorney. In this post, we'll take a look at these common mistakes, and in our next post we'll look at the two mistakes that the article's author claims to be at the core of all estate planning mistakes.
It goes without saying that it is important to select the proper trustee, executor or guardian. Selections sometimes fall to someone ill-equipped for the job, or on someone who has poor a poor relationship with beneficiaries. It is important to think carefully about the matter, and choose somebody you can be comfortable with managing your assets. It is always smart to have a backup as well. And if there are minor children involved, proper guardian selection is important for the well-being of the children.
Beneficiary selections must also be made carefully. It is smart to double-check your primary and contingent beneficiaries for all retirement plans and life insurance policies. And keep in mind that if you don't name a beneficiary, your estate may end up being the beneficiary, leading to estate and income tax consequences.
Sometimes folks forget to plan for incapacity. It is important to set up powers of attorney to ensure your finances and medical decisions are dealt with in the way you would want, in the event you become incapacitated.
Source: Online Athens, "Hewitt: Avoid common estate planning mistakes," Webster Hewitt, November 13, 2011.