Estate planning is something that many people avoid dealing with. Procrastination is not a strategy!

Tim Watters |

Estate planning is something that many people avoid dealing with. Procrastination is not a strategy and it leads to unintended consequences and costly mistakes. Here are some common mistakes that you should avoid:

1. Ignoring beneficiary assignments- Many people are surprised to see that beneficiary assignments take precedence over those indicated in the Last Will & Testament. It is important to review your beneficiary assignments periodically. Remember that there are beneficiary assignments for retirement accounts, annuities, individual and group life insurance and employer retirement benefits as well.

2. Not having estate documents-You would be surprised to see how many people don’t have any estate planning documents in place. You should have a Last Will and Testament, a Durable Power of Attorney, a Health Care Proxy and a Living Will. It is also important to make sure that the people you chose as your Executors, Guardians, Trustees, Health Care Agent and Power of Attorney are still appropriate. Successors for each role should be reviewed as well.

3. Failing to title things correctly- There is a big difference between Joint with Rights of Survivorship and a Joint Tenants in Common ownership. Many people try to use the Joint with Rights of Survivorship ownership to avoid having to do a Last Will and Testament. However, this leads to complications and is unadvisable.

4. Failing to name a beneficiary- If you fail to name a beneficiary for your retirement account and you pass away, it is required that the funds be paid out within five years of the date of death. On the other hand, if you name a beneficiary, they can continue to keep the account indefinitely. Non-spouse beneficiaries must take a required minimum distribution each year. Spouse beneficiaries have more options.

5. Failing to name someone local for the job of Healthcare Proxy- Many people don’t think about the practical implications when assigning a Healthcare Proxy. It is important to have frank discussions with the person assigned to this role about your views on life support options. They should be there when you need their help in the hospital or another health care facility. If you name someone who lives on the West Coast when you live on the East Coast, that becomes impractical and that person may not be able to fulfill your wishes. You are far better off naming someone local.

6. Forgetting to change your estate planning documents when you move to a new state. - Many people don’t realize that their estate planning documents are based on the state in which they reside. If you move from one state to another, you need to create new documents.

7. Not thinking long-term regarding gifting- Grandparents should remember that their children may come to expect that the gifting will continue in the future. If you are going to make a gift for one child, you must make sure that you can afford to do the same thing for the other children.

8. Failing to keep a log of the gifting that has taken place overtime- It is important to keep track of the gifting and family loans you make. Is your goal to make sure that each of your children gets an equal distribution upon you passing away or is it okay if some get more than others?

9. Making homemade documents- Why is it that people think that they should create their own estate planning documents? This attempt to save money will cost a lot more if it is not done correctly. A lack of knowledge concerning estate planning can invalidate the documents. You only need to do your documents periodically. It’s not very expensive if you think of it over a long period of time.