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Common Estate Planning Mistakes

The most common estate planning mistakes are as follows:

1. You do no actual estate planning. You title your assets without any thought about the future. Legal documents needed to accomplish your estate planning goals such as a Will, Trust, Power of Attorney, Power of Attorney for Health Care, and Living Will are not executed or are not executed with attention to your goals. Estate planning should consider more than avoidance or minimization of estate taxes.

Your estate includes all of your assets including your home, your car, bank accounts, CD's, stocks, bonds, insurance policies, annuities, IRA/401K plans, etc. Your estate plan includes legal documents such as a Will, trust, power of attorney, power of attorney for health care and living will and also how you have titled your assets. Many of your assets allow for beneficiary designations such as life insurance policies, bank accounts, stocks, annuities, real estate, and cars. Assets with beneficiary designations go to the beneficiary upon your passing outside the will and are not involved in probate.

Even if a person does not intentionally create an estate plan, she has one by virtue of how she has chosen to title her assets and by the legal documents she has or does not have. This unplanned estate plan may not accomplish her goals. To ensure that your estate plan accomplishes your wishes, consult with an estate planning attorney, a CPA, and/or a financial advisor.

2. No Will is executed. Without a will, your assets will be divided according to Ohio law. This may not coincide with your wishes.

3. You choose the wrong person to be the executor of your estate . The executor will be responsible for the assets that pass according to your Will. The person you name as executor should be organized, detail oriented, and younger than you. It may not be practical to name someone who lives across the country. Name one or two backup persons in case your first choice is unable or unwilling to be the executor. Ask whomever you choose to make sure he or she is willing to do this.

4. Your documents and beneficiary designations are not updated periodically. Your assets change as does your family and the laws. Your estate-planning documents (Will, trust, powers of attorney, etc.) should be reviewed every three years and any time there is a major change in your life such as marriage, birth of a child, or divorce and any time a relevant law changes. You want to check beneficiary designations periodically to make sure these are current with your goals.

5. You keep your family in the dark about your wishes for your estate . It is a good idea to explain your choices to your heirs so that they know your wishes. However, discussions are not legally binding. Often family members fight over furniture, inexpensive jewelry, family photographs - not the things that you might think would cause a dispute. Consider giving away items while you are living. This allows you to watch your loved one's enjoyment of the item.
However, a good estate plan allows a person to do the following:
to control her property while she is alive and well;
to plan for herself and for her loved ones if she becomes disabled; and
to give what she has to whom she wants, how she wants, and when she wants.

This can be accomplished by
Determining your goals and
Developing an estate plan to meet those goals.

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