How to Avoid 5 Common Estate Planning Mistakes in Worthington, OH

June 01st @ 11:50 am

Whether you’re just starting your estate plan or are revising a previous version, make sure that you avoid these common pitfalls!

You likely know the importance of sitting down to consider your retirement plans. While it’s not as fun to think about end-of-life planning, it is a crucial part of ensuring that your assets pass down to your loved ones following your wishes. Make sure you know these common estate planning mistakes so that you can avoid them throughout this crucial process.

Estate Planning Problems You Can Avoid

Even if long-term care of death seems far off now, it’s never too early to start planning. If you wait for a health scare or other major life event to start your estate plan, you’re more likely to make a mistake. Instead, taking some time to lay out your intentions now will help you ensure that your wishes are accounted for. Whether you’re just getting started or revisiting an existing plan, keep an eye out for the most common estate planning problems.

1. Not Updating Your Plan with Life Changes

The biggest mistake you can make is not having a plan altogether, as this all but guarantees that state laws and probate process will dictate where your assets go. However, even if you do have a real plan, you’ll need to go in and make changes now and then. Estate plans aren’t something you can set and forget; they will need to be updated every few years. Moving to a new state, a new family member’s birth or death, and income tax changes can all impact your estate plan.

2. Having an Outdated or Single Beneficiary

There are several common mistakes with beneficiary designations. The first is forgetting to update your beneficiaries with life changes. The second is assuming that your will can override beneficiaries that have been named on your other assets. You may have put down a former spouse, deceased family member, or sibling on your retirement account, life insurance policy, or another asset when you first opened the account. If you haven’t updated it, then it will still pass to that unintended beneficiary.

You’ll also want to ensure that you have contingent beneficiaries in place. Doing so ensures that your assets will pass to whomever you put next in line if your primary beneficiary passes away. Failing to do so can get your assets tied up in probate.

3. Ignoring Estate Tax Liability​

While the federal estate tax exemption amount is fairly high, the same can’t be said for some state levels. Plus, with the government looking at tax solutions to increase revenue, estate taxes may increase over the next few years. Pay attention to changes and make sure you’re aware of federal tax consequences and state estate and inheritance taxes.

4. Improperly Funding Revocable Trusts

If you have a living trust, double-check that assets are correctly moved over. Personal effects are relatively straightforward to transfer, but any real estate will need the deed updated, bank accounts may require a name record change, and car titles may need to be re-registered.

5. Skipping Health Care Concerns

In addition to having a power of attorney for your financial matters, it’s essential to have a medical power of attorney. This document, also known as an advanced medical directive, allows a trusted person or people to make medical care decisions if you become incapacitated.

Financially, you should also consider the costs of long-term care. Discuss options with your advisor on how to best fund in-home or facility care, as prices are always on the rise.

While these common estate planning mistakes are crucial to address, we’ve only scratched the surface of the planning process. Working with a financial investment advisor can help you determine the best path for you and your family’s special needs, ensure you have your estate planning documents in order, and connect you with legal advice.

If you need estate planning guidance in the Lancaster, OH area, consider reaching out to Royal Oak Financial Group. Our financial advisors can help you make sense of your estate plan and avoid the potential pitfalls of do-it-yourself planning. Get in touch today to get started!


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