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Watch out for these estate planning mistakes

St. Paul residents may do a lot of planning for their futures. They plan for vacations. They save money for a rainy day. They plan for retirement. However, how many have taken the step of planning for the inevitable -- death? It's not pretty to think about, but, if there's anything we can all count on in the future, it is that someday we will pass away. We can plan for this eventuality through estate planning. However, it is important to look out for certain estate planning mistakes.

One mistake is to procrastinate. If a person puts off estate planning and dies suddenly without a will or trust, their property will go through probate and the state will decide who is to inherit through intestacy laws. Since it is quite possible that a person might have a different idea about how they want to pass on their assets, it is important to execute an estate plan sooner rather than later.

Once an estate plan is in place, it should be reviewed periodically. As we age, our life circumstances change. We may have acquired or gotten rid of certain assets. There may have been a divorce, death in the family or a marriage. Children or grandchildren may have been born. By periodically reviewing one's estate plan, a person can ensure that it takes these changes into account.

Also, a person should make sure that assets are titled correctly, and that the proper beneficiaries are named. Since a beneficiary designation trumps anything a person might have in their will, it is important that they are correct. For example, if a person named their spouse as a beneficiary and then subsequently divorced them, unless the beneficiary is changed, that person's ex will receive the proceeds of the asset -- something a person usually wouldn't want!

Finally, if a person has a revocable trust, it is important to place assets in the trust. Without assets in the trust, there is nothing to distribute to one's heirs. A "pour over" clause in one's will is one option. In such a clause, property that a person did not title in the trust's name during their lifetime will "pour over" into the trust when the person dies.

As this shows, there are certain mistakes to avoid in estate planning. A well-rounded estate plan can serve a person well, so it is important to avoid making mistakes that could make it ineffective.

Source: wmur.com, "Money Matters: Estate planning mistakes," Marc Hebert, Dec. 28, 2017

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