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Avoid these 3 estate planning mistakes

On Behalf of | Sep 1, 2021 | Estate Planning |

Many people set their ideas on a specific estate planning tool, such as an incentive trust or offshore trust, because someone they know uses one or because they have read good things about them in the press. That is a mistake.

There is no standard way to make an estate plan. The term “estate planning” encompasses a variety of ways to achieve several different goals. What your sister or business partner needs is not the same as what you need. What works for you now might not do so in 10 years. 

Poor estate planning can see your efforts and money go to waste

Here are some other common errors to watch out for in your estate plans:

  1. You focus only on what happens after you die: While leaving things to other people is part of estate planning, you should also think about yourself. Setting aside enough for old age and the possibility you need long-term care is crucial.
  2. You do not give anyone the power to take over: Let’s say you own a business. Five years to the day, you suffer an unexpected heart attack and pass away. What happens now? If you have not given someone else a power of attorney to sign checks or withdraw cash, your business will grind to a halt. The same applies to your personal life. Having a power of attorney allows someone to step in and pay the bills straight away.
  3. You forgot about taxes: You were so intent on making and saving money that you forgot about reducing the tax payable when it passes on to your beneficiaries. Leaving a large sum in the bank may seem impressive, but gift allowances and trusts can ensure more of that money gets to your beneficiaries rather than the IRS.

The best way to make an estate plan is to get guidance from a trusted advisor. Once you understand all the options, you can choose what suits you best.