Even though planning your estate isn’t an enjoyable job it’s necessary so that you can efficiently and successfully transfer all of your assets to those you leave behind. With a bit of careful planning, your heirs can avoid having to pay estate taxes and federal taxes on your assets. As well, a well planned estate avoids confusion for your loved ones.

Still, with all the advantages of estate planning, many people make a great many mistakes in the process. The most common mistake when it comes to estate planning is not getting around to doing it at all. Make sure that you take the time to plan at least the financial portion of your estate so that you leave your loved ones behind with some amount of security. The following seven mistakes often put families into great difficulty after a loved one’s passing.

1. Don’t fall into the trap of thinking that estate planning is just for the rich. This is completely false as planning your estate is essential for anyone who has any amount of assets to leave behind. Many people don’t realize that their estate is as large as it really is, especially when they fail to take into account the assets from their home.

2. Remember to update your will and to review it at least once every two years. Factors that can change information about your beneficiaries include deaths, divorce, birth, and adoption. As your family structure changes so does the change in your assets and who you want to leave them to.
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Step One: Plan for the Unexpected Big Time Bill

The first step arises from debt from a one-time large expense – something that is too large to be paid for with your monthly paycheck, or by saving for a few months.

Many of these debts are investments in either an asset that will appreciate over time, or a income stream that will be greater over time. The most common example is the purchase of a home. Very few people are able to save enough money to purchase their home outright, or pay for their entire home out of a few paychecks. We use a mortgage to pay for the home after-the-fact, and to enjoy home ownership in the meanwhile. Another example is investment in education. Many people cannot afford to pay for college tuition outright – so we take out loans, planning that our future income stream will enable us to be able to afford to pay for the education after-the-fact.

The more insidious type of one-time large expense is the expense that is not an investment. The emergency, unexpected, unplanned-for bill – extreme medical bills, disability, failure of a business, a lawsuit judgment, or long-time unemployment. These bills can put a family under – forcing them to either sell assets, move out of their home, or declare bankruptcy, because they will never be able to pay off the debt with their income.
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