An estate plan may make it easier to manage your affairs while you’re alive and after passing on. In addition to providing a mechanism to transfer assets to beneficiaries, an estate plan may also allow you to designate a guardian for your children. Take a look at some common estate planning mistakes that Illinois residents should seek to avoid.
Not having a plan
It’s generally a good idea to start creating an estate plan as soon as you become a legal adult. Younger adults can typically get by with just a will, a living will and other basic documents. If you have a child, it may be a good idea to create a living trust to hold any assets that he or she is too young to legally take possession of. Older adults may want to consider creating power of attorney documents to ensure that their affairs are in order if they are ever unable to manage them.
Failing to update beneficiary designations
Bank, brokerage and other financial accounts typically have beneficiary designations attached to them. The same is generally true for most retirement accounts. When you die, the person listed on the beneficiary form is the one who obtains ownership of that asset. Therefore, unless you review these forms regularly, there is a chance that an estranged child, former spouse or former friend will receive something that may have been intended for someone else. Ideally, you’ll review your entire estate plan at least once per year to ensure that the right people inherit your assets.
If you have questions or concerns about your estate plan, it may be in your best interest to talk to an attorney. He or she may be able to help you craft plan documents or review those that have already been created. A legal professional may serve as your estate representative if you don’t have any family members who can fill this role.