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Avoid these common pitfalls when estate planning

When it comes to drafting an estate plan, it is important to be thorough and explicit. The wrong language could result in a situation where certain people are inheriting (or not inheriting) certain assets that may not be what the deceased actually wanted. Moreover, mistakes made early on in an estate plan could wind up significantly reducing the size of one's estate upon their death. The following are some common pitfalls people in North Carolina will want to avoid when estate planning.

First, while a person may have already designated a primary beneficiary on certain assets such as life insurance policies or retirement accounts, they should not let the matter rest there. They should also name a contingent beneficiary should the primary beneficiary die before the account holder dies. In addition, review beneficiaries periodically. After all, if one divorces, they may not want their ex named as a beneficiary to these valuable assets.

When it comes to a will, specific bequests will be honored first. However, what if a person does not own that investment at the time of their death? That person's estate may have to purchase the asset through the estate assets, which could mean less to distribute to the other beneficiaries.

Finally, if one has minor children that they are leaving assets to in their will, they should appoint a guardian. The guardian will be responsible for handling money left to the minor children at the time of the parent's death. It may be preferable to have a guardian you chose rather than one the court chose. In addition, vague phrases in a will, such as leaving assets to the children "for their benefit," can cause more problems, as there are a variety of ways to interpret this.

Estate planning is important for those of any age and at any stage in life. If a person has young children, adult children, a spouse or an ex-spouse, they will want to ensure their estate plan meets their wishes with regards to who should inherit what. Having an effective estate plan can ease the burden on your loved ones during the estate administration process, as they will not have to guess as to what your wishes were. This could help them through a difficult time, which is something most people want for their loved ones.

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