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Building wealth is only half the job. Protecting wealth for your loved ones and yourself is equally important. Through estate planning, business planning, and asset protection, our firm will help you protect everything you love — family, friends and favorite charities. For more information be sure to visit our web site where you will have access to our blog, events schedule and a complimentary newsletter subscription!
What are the Most Common Estate Planning Mistakes?
The most common estate planning mistake is failing to have a plan. Estate planning attorneys know people prefer not to address their own incapacity and death. They also know the problems that result when there is no plan. Having a properly prepared estate plan alleviates some of the financial and emotional stress for a surviving spouse and other family members.
Failing to Fund Trusts Undermines the Best Estate Plan
If you have a revocable living trust, then “funding” the trust is required to take assets out of your direct ownership and make your trust the owner. This is the process through which homes, vehicles and any other assets owned through titles or deeds are formally transferred to your trust. A properly funded revocable living trust can help your estate avoid probate. Depending on your state of residence, this can expedite the settling of your estate, save unnecessary legal expenses and keep your private matters private.
Neglecting Incapacity Planning
Planning for incapacity due to illness or injury is as important as planning for the eventual administration of your estate at death. Without proper legal documents—advance health care directive, HIPAA authorization, healthcare proxy, living will, and general durable power of attorney —family members, including spouses, may not be able to access medical information or be part of your health care and financial decision-making process, without first going to court. At a time of family stress, this is no time to pile on any additional legal red tape.
Creating an Estate Plan Without Professional Guidance
Expecting an online, DIY last will and testament to replace a comprehensive estate plan prepared by an experienced estate planning attorney is risky at best and disastrous at worst. Not surprisingly, each state has its own laws when it comes to the proper preparation and execution of a last will and testament. If your last will fails to comply with state law, then it may be declared invalid. In that case, the only option for your surviving spouse or other family members will be to process the estate under the intestate succession law of your state. In other words, when your last will is declared invalid, then state law decides who will inherit what and when from your estate. This is best avoided. The good news? You will not be around to see the mess you left. The bad news? Your loved ones will have to clean up your mess.
Leaving Original Beneficiaries on Non-Probate Assets
Every account with a designated beneficiary transfers on death to that beneficiary. Failing to review and update those beneficiary designations, however, may result in loved ones being unwittingly disinherited. For example, take life insurance. It is not uncommon for an ex-spouse to receive an unintended windfall, when the policy owner dies. Fortunately, such outcomes can be easily avoided simply, by updating the beneficiary designations on all assets for which beneficiaries have been designated. Review them on a regular basis or whenever a major life event occurs, like a divorce or the death of a spouse.
Not Updating Estate Plans to Stay Current with Changes in Estate and Tax Law
Just as changes happen throughout our lives, estate and tax laws change also. In the coming year, major changes are expected to occur in both estate and tax laws. An estate plan created five to ten years ago may not provide the same financial protection or legal outcomes as one created last year. Changes coming in 2022 may require further updating.
Let Adult Children or a Trusted Friend Know Where Documents Can be Found
Having an estate plan is a gift to your loved ones—unless they cannot locate the documents in a timely fashion following your incapacity or death. Would those appointed to have an active role in your estate plan know where you keep your essential estate planning, financial, tax and personal documents? Would they be able to access them? Do you really want them to wade through file drawers and boxes of thirty, forty, and fifty-year old paper records to find important information? While a safe is a great place to store original documents, it can defeat the purpose if the password is not known or available. Similarly, a safe deposit box may require a court order to access the contents, unless you include your spouse, adult children, or others on the signature card at the bank.
Leave a Legacy by Preparing for the Future
The loved ones you leave behind will recognize the effort you made to address your estate planning. It is part of caring for your family and the legacy you will leave with them.
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