The following are the top 10 Pitfalls investors make in basic estate planning:
| # | Top 10 Pitfalls |
|---|---|
| 1. | Failure to prepare a will and update it periodically – Dying intestate allows the state to take over the decision of who gets what. |
| 2. | Lack of flexibility – Life brings changes, and inflexibility may cause you to overlook certain future necessities such as the need to pay for college or for specialized medical care. |
| 3. | Lack of cash liquidity at time of death – If there is not enough cash to cover expenses at death, estate assets may need to be sold quickly. |
| 4. | Not planning for business interests – Advance planning is necessary to figure out what will happen to your portion of your business when you die. |
| 5. | Not obtaining and integrating life insurance policies into estate assets – Life insurance benefits are considered part of your estate, and the policy is a tool in the estate planning process. |
| 6. | Not taking advantage of tax savings – Taxes can change annually, so a review of your estate plan in regard to new laws is necessary. |
| 7. | Not having a retirement plan – Retirement planning is concerned with income you will need at retirement (which will also affect the total value of your estate). For more information, please look at our section on Retirement Planning. |
| 8. | Relying too heavily on outside income sources – If you are expecting all your income to come from government sources and pension plans, you may be unpleasantly surprised by changes in eligibility, etc. |
| 9. | Not allocating sensibly – Your mix of investments and other income sources should be efficient and stable. Too many high-risk investments may lower the value of your estate in the future. |
| 10. | Not having a current, updated Estate Plan – Estate plans must be updated periodically to make sure any changes (personal and governmental) are incorporated. |
Objectives-Estate Planning