As you work to develop your estate plan, you need to make sure to create a proactive plan that will make things easier for your family, not harder. This requires you to make a more detailed estate plan that really thinks things through and makes things as easy as possible for your family.
Having a Patchwork Plan
First, do not try to make your own informal estate plan. Naming someone as a beneficiary on your retirement plan or adding someone onto the title of your home is not an estate plan. These measures will not save your family from having to go through a probate process and can make things more complicated. You need to have a formal will or trust in place that states how you want to be taken care of at the end of your life and how you want your possessions handled.
Treating Your Estate Plan Like a Stable Document
Your estate plan is not a stable document and should not be treated as such. Your estate plan isn't something that you can just create and forget about. It is something that you need to actively update over time.
If someone in your family dies who was included in your estate plan, you need to update it. If someone new is born into your family, you may want to include them in your will. If you move states, you need to make changes to your will to reflect the laws in that state.
Your estate plan is something you should update every few years or whenever a major life-changing event occurs in your life.
Not Including Long-Term Care
The truth is, once you reach a certain point in your life, you are going to need someone to help take care of you. You may need in-home care, or you may need to transfer to a care facility.
It is important to make sure that you have a long-term care plan included in your will. You need to make sure you have a long-term care insurance plan in place. You need to account for how you want to be taken care of as you age and at the end of your life. Your estate plan can help you when you are still alive as well.
Plan for Taxes
It is true that you have to have a lot of wealth in order to pay federal taxes. However, you don't need to have that much wealth in order to have to pay state taxes. You need to plan for how the state estate tax liability will impact your estate plan and your family.
When it comes to planning for your estate, you need to put a formal document in place and update that document on a regular basis. You need to include a long-term care plan and think about taxes.
Contact an estate planning consultant for more information.