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Wills and Estate Plans: Seven Mistakes to Avoid
Inadequate insurance
Before the ink has dried on the paperwork for your new home chances are you'll be offered mortgage insurance. Perhaps you should reconsider the offer because you may not be getting the best value for your dollar. Mortgage insurance is likely to benefit the bank, not your loved ones. And the premiums are higher than term insurance, which will consider the money your family will need if you are no longer living. So if you want to ensure that your loved ones won't be kicked out of house and home, reassess the type of insurance coverage you have on your mortgage.
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Wills and Estate Plans: Seven Mistakes to Avoid
Not setting up a trust fund for your pets
When real estate mogul Leona Helmsley died in 2007, she left her white Maltese, Trouble, a $12 million trust fund. (Now that's one lucky dog!) Helmsley's situation is an extreme case, however, pets are like children and they depend on humans to care for them. In fact, many estate planners recommend that you set up a formal trust to ensure that your pets will be properly cared for. With a formal trust you can spell out exactly how the funds should be used.
Wills and Estate Plans: Seven Mistakes to Avoid
Inadequate insurance
Before the ink has dried on the paperwork for your new home chances are you'll be offered mortgage insurance. Perhaps you should reconsider the offer because you may not be getting the best value for your dollar. Mortgage insurance is likely to benefit the bank, not your loved ones. And the premiums are higher than term insurance, which will consider the money your family will need if you are no longer living. So if you want to ensure that your loved ones won't be kicked out of house and home, reassess the type of insurance coverage you have on your mortgage.
Wills and Estate Plans: Seven Mistakes to Avoid
Not enjoying your money while you have it
Does your family call you Ebenezer Scrooge? Being frugal is always fashionable but so is enjoying the money you have worked hard for. If you die wealthy your legacy will likely be huge tax bill for your heirs. Nobody likes to receive the gift of tax.
It's understandable if you don't believe in giving your heirs a free ride. However, you can provide for your family's education, medical and help them purchase their first home while avoiding a tax burden by setting up a revocable trust.
Wills and Estate Plans: Seven Mistakes to Avoid
Not understanding the title of your assets
You may own an asset by yourself, however, don't assume that things won't be changed after your death. If you are married and you die, your assets will automatically go to your spouse through what is called the Right of Survivorship. So if you are in a second marriage and have children from a previous relationship they could be disinherited. Not cool. If you want to be assured that, today, after your death, your wishes will be irrevocable talk to your lawyer about creating a special provision in your trust that will safeguard against a spouse re-gifting. After all, it's your will isn't it?
Wills and Estate Plans: Seven Mistakes to Avoid
Not selecting a health care power of attorney
Not only should you have adequate health insurance you also need to designate a health care power of attorney. If you are incapacitated someone will need to make important medical decisions on your behalf. You should make this selection while you still have your full mental capacities. In addition, identify a back up in the event that your chosen health care power of attorney is unable to carry out your wishes.
Wills and Estate Plans: Seven Mistakes to Avoid
Who gets the frozen stuff?
Not only has reproductive technology assisted in the births of a myriad of children worldwide, it has also opened a Pandora's box of questions about what to do with the frozen eggs and sperm after one has passed away. The law hasn't caught up with the speed of technology and has left many surviving spouses in a legal and moral predicament. To avoid this, many lawyers recommend accounting for future offspring explicitly in an estate plan. If you don't, it will be a free-for-all in the courts without a written agreement.
Wills and Estate Plans: Seven Mistakes to Avoid
Not communicating with your family
Most importantly, communicate with your family when it comes time to drafting your will and estate plan. You can avoid bitter conflicts down the road and ensure that you will leave a loving legacy for those you love.
Wills and Estate Plans: Seven Mistakes to Avoid
Although the need for a will often comes up in lists of things to work on if you're interested in getting your affairs in order, powers of attorney usually don't make the cut as a topic of discussion...
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