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A look at how to avoid the three biggest estate planning mistakes

This article looks at three common estate planning mistakes, such as out-of-date wills and not having a trust.

Making a will is extremely important and having one should be everybody's first step in creating an excellent estate plan. However, estate planning does not end with creating a will alone. From end-of-life care to taxation concerns, there are many aspects of estate planning that require more than just a simple will. Below is a look at three of the biggest mistakes that are often made in estate planning and how to avoid them.

1. An outdated will

In some cases, having an out of date will can be worse than having no will at all. As CNBC points out, an outdated will is especially problematic when one of the beneficiaries is an ex-spouse. Particularly in cases where one is separated but not divorced, then a will could see one's assets go primarily to an estranged spouse. Another important reason to keep wills up to date is because many state laws do not take step children into account if a person dies without a will. Generally, after any major life event, such as marriage, divorce, or a promotion, a will should be updated.

2. Planning for disability

As Forbes notes, estate planning is about more than just deciding what happens with one's assets after death, it is also about making important medical and financial decisions in case of incapacitation. A disability, such as Alzheimer's, may make it impossible for a person to make informed decisions about the care they receive and about how their assets are handled. A number of documents and directives, including a power of attorney, a living will, and an advanced directive, can help ensure that these decisions are made beforehand or left to a trusted individual.

3. Tax issues

Even in death there are tax issues to consider. While one's estate may be exempt from the federal estate tax, there's a much higher chance it will be subject to state estate taxes, which typically have much lowe r thresholds. If the tax bill is high, then assets may have to be sold off in order to pay the IRS, which can mean that items meant for heirs are instead lost. One way of lessening the tax burden is by setting up a living trust, which can lead to lower taxes while also allowing one's estate to stay out of probate court (and thus out of the public eye).

Estate planning help

Estate planning may be complex, but it is extremely important. An experienced estate planning attorney can help individuals understand how they can go about protecting their assets and ensuring their loved ones are set up for the future. From drafting a will to setting up a living trust, an experienced attorney will be able to help clients settle all of their estate planning needs.

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