The turn of the new year often brings with it a renewed focus on planning and organization, especially when it comes to managing our personal affairs. Estate planning, a crucial aspect of financial management, often gets overlooked. In a recent informative session hosted by VillageCore, Shirin Alipanah, a board member and marketing lead, welcomed David Yankaskas, a financial insurance expert, to discuss the intricacies of estate planning. This blog aims to share vital insights from this session, highlighting the top five pitfalls in estate planning and how to avoid them.
1. The Importance of Having a Will:
David emphasized that over 60% of parents in the U.S. haven’t completed estate plans, leaving their children and assets at risk. He pointed out that a will is the only legal document where you can name guardians for your children. In its absence, the state could end up making these crucial decisions. To avoid this, it’s essential to not only have a will but also ensure it’s updated to reflect current guardianship preferences.
2. The Necessity of a Trust:
Another critical aspect David touched upon was the importance of having a trust. He explained that minor children legally cannot inherit money or property outright. In such cases, a trust ensures that a designated trustee manages these funds for the children’s benefit, thereby preventing these assets from getting tangled in the probate process.
3. Naming Minor Children as Backup Beneficiaries:
A common mistake in estate planning is naming minor children as backup beneficiaries on life insurance policies. Since minors can’t directly inherit, this can lead to complications and court interventions. Instead, David suggests naming a trust as the beneficiary to ensure seamless asset management.
4. Preparing for Emergencies:
David highlighted the need to prepare for unforeseen emergencies. For instance, what happens if an accident occurs while parents are away? It’s vital to designate temporary guardians and provide clear instructions for such scenarios in the estate plan.
5. Documenting and Tracking Assets:
Lastly, David underscored the importance of meticulously documenting and tracking all assets, including bank accounts, credit cards, and passwords. This comprehensive list should be safely stored and easily accessible to trusted individuals in case of emergencies.
Estate planning, while complex, is a necessary step in safeguarding your family’s future. By being aware of these common pitfalls and taking proactive steps to avoid them, you can ensure that your estate is managed according to your wishes. Remember, estate planning is not just about asset distribution; it’s about peace of mind and security for those you care about most.
