Perhaps you are new to estate planning and are thinking about creating your will while taking a look at other tools such as a trust or powers of attorney.
Preparing for the future is important for anyone, but here are four estate planning mistakes you should avoid.
1. Not planning for long-term care
At least 70% of all adults aged 65 will require nursing care. In 2020, the monthly cost of a semi-private room in a nursing home was $7,756. A private room runs close to $100,000 per year. Make a note to plan for disability and long-term care as soon as possible since nursing home costs escalate every year.
2. Failing to plan for minors
If you have minor children, you need to arrange care for them if you and your spouse should die unexpectedly. When you prepare your will, make sure that you name a guardian. When leaving money to benefit the children, include instructions as to how those funds should be used for the children’s welfare.
3. Not creating asset liquidity
You must figure asset liquidity into your estate plans. If your estate is to be split among heirs, liquidity is a must. The funds will enable your heirs to continue operations if you have a business. Life insurance is a good source of estate liquidity.
4. Failing to update
Your attorney can help you determine the best estate planning tools for your circumstances, starting with a will. Remember that major changes in life happen. There may be births, deaths or a divorce that will affect you as time goes on. As a result, you should review and update your estate planning documents every three to five years.