If you have concerns about your loved ones’ well-being after you are gone, you may be considering your options for estate planning. Like many in Kansas and across the country, you may be hoping the assets in your estate can provide some stability and security for your loved ones. However, to ensure you meet these goals, you will have to do some careful planning.
Financial analysts predict that the coming generations will inherit more than $68 trillion. While you may not have trillions to pass along, you certainly want to make sure your estate plan maximizes your hard-earned wealth without sacrificing it to taxes and other legal expenses. You also likely want to help your loved ones avoid a long and costly probate when they could be enjoying their inheritance and moving forward with their lives.
Meeting your goals for an efficient transfer of wealth
An estate plan does not have to be complicated to be effective. Simple documents, such as a well-drafted will or a revocable trust, may be adequate. On the other hand, depending on the amount and type of assets you possess, you may find that more complex tools will serve your purposes. No matter your goals, you do not want to be among the many who take the step to make an estate plan but ruin their good efforts by making common mistakes such as the following:
- Failing to convert 401ks and traditional IRAs to Roth products to reduce the tax ramifications for those who inherit these investments
- Establishing a trust but neglecting to fund your assets to it
- Failing to designate your trust as the beneficiary of your retirement account, annuities or life insurance policy
- Leaving direct bequests to minors, such as your grandchildren or children under age 18, instead of naming a guardian or creating a trust
- Neglecting to name beneficiaries for your accounts and investments
- Neglecting to update beneficiaries as circumstances change, such as divorce, remarriage, new laws or changes in assets
Perhaps the most common mistake people make is not taking the time to create an estate plan in the first place. There is no question that the estate planning process can be intimidating, but the alternative may be equally upsetting. Having no clear plan may leave your loved ones with confusion, disputes and financial struggle as they wade through the uncertainty of probate.