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Common mistakes made when estate planning

New Jersey residents may wonder about common mistakes people make when establishing their estate plans. Being aware of a few common estate planning errors can help people know how to better manage their affairs.

A very common mistake that people make is thinking that they are too young to need an estate plan. However, people of any age may need to have a plan established even if they do not yet have substantial assets. For example, a person who is hospitalized with an unexpected illness or injury may benefit from deciding in advance who has the power to make medical decisions or what type of treatment is desired. Once the estate plan is established, it would be a mistake to keep it a secret. Many experts recommend telling family members what to expect in advance to avoid conflict following death.

Another common mistake is failing to account for federal and state estate taxes. The blow can be somewhat softened through the use of lifetime gifts and other tax-saving tactics. Those establishing an estate plan must also consider whether leaving large amounts of cash to some people may not be as prudent as establishing a trust to pay them over a longer period. Above all, it is important for people to periodically review their wills and other documents. Changes in circumstances often require modifications to estate plans.

When a person is ready to start estate planning, an attorney may be able to help decide whether a will or trust is the best vehicle. An attorney may also be able to review the plan regularly in order to ensure that it meets the client's ongoing needs.

Source: Business Insider, "5 Common Estate Planning Mistakes To Avoid", Mandi Woodruff, October 21, 2013

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