Estate planning tends to get pushed to the back burner, as more pressing financial tasks take center stage. But neglecting estate planning is a huge mistake. Estate planning may involve hiring an attorney or financial advisor, but plenty of people make the mistake of going about estate planning on their own. Some 38% of those with investable assets over $1 million haven't used a professional to help with their estate planning, according to a CNBC survey. "Most people don't want to think about dying," said Ryan Wibberly, CEO of CIC Wealth based in Gaithersburg, Md. "Part of your financial planning needs to include a discussion about the next generation and wealth transfer."
The Street’s “Mistakes You Need to Stop Making,” warns that this aversion to facing our mortality results in leaving a mess to our potentially vulnerable loved ones.
Here are a few mistakes to avoids, according to the article.
Mistake 1: Not Signing a Will
Even those who are proactive in their planning sometimes forget to dot the I’s and cross the T’s—some people, for example, write a will but never actually sign it! This becomes a priority only after a health crisis or another life change. That's risky! It’s really important to have a signed will in place before something urgent arises.
Mistake 2: Tax Faux-Pas
Federal estate tax laws exempt taxes on estates with assets under $5.43 million per person, but some people with assets less than the threshold think they're exempt from estate planning. Not so! There are a number of other benefits for estate planning. This includes avoiding financial disputes about the inheritance, protecting assets from creditors and lawsuits, and donating to charity. In addition, state estate tax is part of the process, too. Your state might have a much smaller estate tax exemption limit.
Mistake 3: Negligence/Being Out-of-Date
Failing to keep your estate plan up-to-date is another dangerous mistake. Make sure that you do a review with your estate planning attorney any time a major life event happens, for example, divorce, a death in the family or the birth of a grandchild.
Talk with a qualified estate planning attorney and avoid these estate planning mistakes.