Most Novi area residents understand the importance of estate planning. An estate plan is important for almost everyone but when a person creates an estate plan there are mistakes that can occur. The following are some of the more common estate planning mistakes that should be avoided.
Not understanding their estate plan
If a person gets done signing all their estate planning documents and doesn’t understand what they just signed it can be a bad sign. A person should understand everything that is in their estate plan, how it works, and what needs to be done to implement the plan.
A person picks a beneficiary for their financial accounts, retirement accounts, life insurance, etc. and never goes back to update these beneficiaries. The account would then be passed to an ex-spouse, parent or siblings because that’s who a person chose all those years ago. Beneficiaries should be reviewed every few years.
Updating asset ownership
It is important for a person to update how assets are owned. Whether they’re owned by both partners, one person, in a trust, by an adult child, etc. it should all be reflected in an estate plan.
Not funding revocable trust
Revocable trusts are popular estate planning tools but they need to be funded in order to be effective.
Not updating powers of attorney
A power of attorney has an important role in a person’s estate plan. A person needs to have both a financial power of attorney and health care power of attorney. These names should be reviewed often in case circumstances have changed.
Not updating the estate plan
When there’s a major life change in a person’s life including a birth, death, divorce, marriage, etc. an estate plan needs to be revisited.
An attorney who specializes in estate planning can help create an estate plan that meets their client’s unique circumstances. They will make sure the plan is up-to-date and that it reflects their client’s wishes.