If you are a proactive kind of person, you probably get a lot of kidding for expecting the worst to happen. However, to you, it just makes good sense to anticipate the worst and make a contingency plan. This may mean having an alternative plan when your daughter wants an outdoor wedding, overpacking when you go on vacation and creating an emergency savings account just in case.
You may also know the importance of having sufficient life insurance and a thorough estate plan because the end of life is something no one can avoid. Whether you have already made that plan or you intend to do it soon, you will want to make sure to avoid common mistakes that can nullify the good planning you are trying to do.
Facing your family
Your choice of estate executor is crucial. For many, the honor of personally representing an estate is earned through birthright. If you have chosen your eldest child to manage your affairs, are you certain he or she is the best choice for the job? The role of an estate executor requires attention to detail, commitment, organization and a sense of responsibility. Additionally, since probate may take months or even years, your representative should have the flexibility to handle the job around personal obligations.
Keeping your estate plan a secret from your family is often a mistake, especially if your plan contains decisions your heirs may find unexpected. A frank conversation with your loved ones will allow them to hear and understand your intentions and ask any questions that may arise. It is often better to allow the heirs to express their grievances or confusion while you can still provide an explanation, rather than have them question your mental capacity after you are gone.
Managing your assets
Since your estate plan focuses on the division of your belongings, you probably have a clear idea of how you would like that division to happen. It is important to avoid certain missteps that can have disastrous results such as:
- Leaving valuable assets or substantial money to minor children instead of placing them in a trust to provide for the child’s future
- Under or overestimating the true value of your estate
- Forgetting to fund your assets to your trusts
- Neglecting a periodic review of beneficiary designations on your insurance policies, retirement accounts, trusts and other documents
- Not considering how Oregon’s estate tax or federal taxes will affect the value of your estate
Additionally, if you own a business, a significant part of your estate plan may concern the fate of that business. Leaving your family with guidance to deal with the tax implications, as well as the succession or sale of your business, may prevent tremendous stress for your loved ones. Carefully planning your estate is one way to leave a positive legacy for your family.