Common Estate Planning Mistakes You Should Avoid
Ask a financial manager about the number of ugly incidents they have witnessed in their career. They will tell you that they have witnessed several families breaking down because of current finances or the changing of financial situations.
There have been times when people cut all ties with their loved ones due to financial issues and the legal battles involved in them.
One crucial part of your finances is your estate and there are several people who go wrong in planning their estate the right way. Discussed below are some of the common estate planning mistakes made by individuals:
Selling property at wrong price
Often, people move out from their hometown to live in a different city or country. During this shifting phase, they tend to sell-off properties and all possible belongings in that area.
In this particular situation, most people make the blunder of selling off their estates at a considerably lesser price than what they should actually acquire for their estate. There could be several reasons for this compromise.
But, it is wise not to make this error because you lose out on thousands of pounds. If you do not have sufficient time or appropriate buyers ready to pay the right sum then it is better to wait. You can wait for a couple of months and sell it off once you get a buyer who is ready to pay the right value for your estate.
Leaving Assets For your Children who Are Minors
It definitely makes sense when you wish to leave a major part of your net asset for your kids and there is nothing wrong in this. But, if your kids belong to an age group wherein they cannot shoulder financial responsibilities, it is recommended to mention a guardian to shoulder this responsibility.
For instance, if your kid is a minor, you can mention in your Will that the estate belongs to the guardian until your kid turns an adult. This way, your estate stays under your kid’s name only and there are fewer chances of them losing right on your estate.
Yet another mistake that most individuals tend to make is that they either do not mention or wrongly mention name of the beneficiary. Every individual must mention a beneficiary name for their insurance policies, retirement accounts, estates and other assets.
If you fail to mention a beneficiary’s name then the estate is likely to be transferred to creditors or is a subject to probate, etc. To avoid any sort of confusion or estate being transferred to any of your creditors it is smart to precisely mention the name of the beneficiary.
Having a specific beneficiary for particular investments
There is high possibility that you may have quite a number of properties under your name. If you do not want to give away all of them to one particular person then it is necessary for you to clearly mention about it in your Will.
All you need to do is learn how to make a will at home. You can use free DIY Will kits and draft an actually valid Will that gives you assurance about the safety of your assets and your loved ones.
There are some legal companies which encourage individuals to choose this option simply because it is the most transparent and hassle-free choice available to you. If you have any queries regarding to your unique situation then they do guide you in the process so that you draft an appropriate Will.
Transferring it to one person
Although, your spouse might the only person you completely trust but it is suggested not to name all your estate under their name. You may have heard of the saying-‘you must not put all your eggs in one basket.’
Besides, there are some taxes levied on to your spouse if they own all the estates. So, in order to save yourself from additional taxes it is wise to segregate your estates amongst your loved ones.
This will help you to create financial balance and your family is on a safer side as they are protected from unwanted taxes in your absence.
Think before you gift
As much as you would like to gift your house to your kids but it is also important to determine whether they have same interests. There have been several instances in the past wherein parents have left houses for their kids as a gift.
But, fortunately or unfortunately some of them have hardly any interest in the house due to their personal reasons. And, the kids are left with the only option of following the lengthy court process to acquire permission to sell off their home.
Sometimes, these legal processes end up in ruining perfect sibling relationships and hence it is a good move to consider your children’s situation and then prepare an appropriate Will. And, precisely mention all the necessary details in it so that your family lives peacefully and together even when you are gone.