Estate planning is the best way to protect your wealth and secure the future of your loved ones. An estate planning attorney is your best chance of protecting your estate. Here are some mistakes you need to avoid when planning your estate.

Outdated Beneficiary Designations

The provisions on your will do not affect your entire estate. Some of your assets are accounted for in beneficiary designations. Examples of these assets include annuities, retirement accounts, and life insurance.

Failing to update your beneficiary designations may mean your assets are left to the wrong people. For example, if you first assign the assets to certain people, the assets will go to unintended beneficiaries when you fail to update your beneficiary designations. 

In some cases, you might leave someone out because they were married or born into the family after you completed filling the estate planning forms. Ensure you review your designations every few years to account for significant life changes.

Not Setting Up Trusts Properly

Trusts are crucial in estate planning. If you do not set up your trust properly, it will cost you a fortune later. Trusts are meant to protect your assets from creditors and to guarantee that your estate is distributed properly. Trusts also keep your assets, debts, beneficiaries, and all your financial details private.

You should move your assets to the right trust accounts. Moving assets into trusts also enable you to avoid probate. Ensure you consult your estate planning attorney about the process of setting up trusts.

Failing to Account for Disability and Long-Term Care

Disability planning should also be part of your estate plan. Disability planning involves ensuring you have the right amount of long-term and short-term disability insurance. Remember, every year you wait to address disability and long-term insurance, the price rises. Do not forget to include disability and long-term care in your estate plan, as this could make your retirement years very unpleasant. 

Subjecting Your Beneficiaries to Estate Tax

If you die without assigning your life insurance policy to a beneficiary, you could subject your heirs to taxes. While life insurance benefits are not affected by state or federal taxes, they may be affected by the estate tax. For example, the portion of your estate that exceeds the exemption limit of $11.7 million is subject to federal tax.

To remove your life insurance from being taxable, you should gift it to a life insurance trust. If you own it and suddenly die, the proceeds are taxable. You need to ensure your estate planning attorney properly sets up an irrevocable life insurance trust while still alive.

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