Estate planning is often a daunting process, and you may avoid or postpone it because you do not know where to begin. The American Association of Retired Persons reports that this is a common issue and that 60 percent of adults in the United States do not have an estate plan.
One solution for moving forward with estate planning is to learn about some common errors people make during the process and how to avoid them yourself.
Excluding a named power of attorney
While thinking about a future where you may be physically or mentally infirm is not always easy, remaining aware of that possibility may help you with naming an effective power of attorney in your estate document. Once named, this individual can make financial and medical decisions on your behalf, along with other important choices about your well-being. Almost any capable adult can take on power of attorney, from your adult child to your lawyer.
Avoiding life insurance trusts
Any life insurance policies you hold currently may be subject to heavy taxes once you pass away, leaving your beneficiaries with a much smaller financial boon. However, you can prevent this by transferring your policies into trusts, who hold their ownership until the event of your death. Not only might your beneficiaries receive the money faster but also avoid the estate taxes that otherwise reduce their value.
Naming an executor in haste
Taking the time to consider who might best handle your estate could avoid problems after your death. When you choose an executor or executrix, ask yourself if he or she can handle the job with maturity and objectivity.
Making the decision to tackle estate planning is not an easy one, but it may offer you peace of mind that you can provide for your loved ones after you pass away.