Estate planning is a highly avoided process that everyone should go through, but also one that can be fraught with paperwork, tax laws, litigation, and without the right guidance, mistakes. Here are some of the most common things people miscalculate the importance and significance of when considering estate planning:
1. Not Having a Will
The most common estate planning mistake is thinking it’s not necessary, which is closely followed by not having a will. A will is a legal document that clearly outlines wishes for how property and assets will be distributed after you die. In the absence of a will, the state will determine how all assets are divided, which may not at all be in line with your wishes.
2. Not Updating a Will
It’s vital that wills are updated regularly to ensure they are up-to-date, consistent, reflective of current wishes and taking into account any life events that may have occurred since first drafting the plan. These events might entail the birth of a child or grandchild, the purchase or acquisition of new property and/or investments, marriage, divorce, re-marriage, death of a beneficiary, etc.
3. Not Having an Estate Plan
An estate plan is more than just a will spelling out what happens to possessions when life has ended. Suddenly, and without warning, many people come to learn that an estate plan also includes things like trusts, powers of attorney, and health care directives. An estate plan is important for the living as it ensures that wishes are carried out not only after death but also in the event one becomes incapacitated.
4. Not Naming an Executor
An executor is the person responsible for carrying out wishes as outlined in a will. If an executor isn’t named, the court will appoint someone to handle the estate, and in some cases, this may not be the person you would have chosen. This can cause strife among loved ones who then feel left behind.
5. Not Naming Guardians for Minor Children
It’s imperative for parents of minor children to designate a guardian in their will. In circumstances where a legal guardian has not been named the court decides who will care for children after you’re gone.
6. Not Planning for Disability
No one likes to think about becoming disabled, but nonetheless it’s important to plan for it. Without a legal plan in place, your family may have to make difficult decisions about care for you without knowing your expressed wishes, especially if they change and evolve over time like you do.
7. Not Addressing Digital Assets
In today’s digital world, it’s important to think about what will happen to your bitcoin, cryptocurrency, online accounts and other digital assets after you die. Otherwise, loved ones may not be able to access them.
8. Not Getting Professional Help
Navigating the world of estate planning can be complicated. There are a lot of rules and regulations to consider, and it’s easy to make a mistake. That’s why it’s important to get professional help from an experienced estate planning attorney.
9. Failure to Minimize Estate Taxes
Estate taxes can take a big chunk out of an estate, leaving less for loved ones. There are ways to minimize estate taxes, but you need to plan ahead.
10. Not Reviewing Your Plan Regularly
Life is always changing, and your estate plan should change with it. Be sure to review your plan regularly and update it as needed to ensure that it remains consistent with your needs.
If you’re ready to start planning your estate, or if you need to update your existing plan, contact an experienced estate planning attorney today.
11. Losing Control by Adding Someone to Bank Accounts
Oftentimes people mistakenly add someone to a bank account with the intention of allowing said person to pay bills if incapacitation occurs, however it could actually do the opposite. Adding someone to an account grants them full access to the money, therein to potentially spend however they please.
12. Not Having Enough Life Insurance
Life insurance is a critical component of any estate plan. It can help loved ones cover expenses such as funeral costs or outstanding debts after death. Opting out of life insurance could mean your family might be left struggling financially.
13. Not Naming a Health Care Proxy
A health care proxy is someone designated to make medical decisions on your behalf if you are unable to do so. Not having a health care proxy in place means your family could be left to make difficult decisions about care, without always clearly knowing and understanding the wishes of a loved one, which can be burdensome and weigh heavily on hearts and minds.
14. Not Planning for Long-Term Care
If you suddenly become incapacitated and need long-term care, who will pay for it? If you don’t have a plan in place, your family may have to bear the financial burden.
15. Not Updating Beneficiaries
Beneficiaries are the people who will inherit your assets when you die. If you don’t keep your beneficiaries up to date, assets could go to someone you no longer intended to take on this role..
16. Not Protecting Assets From Creditors
Without taking steps to protect assets, they could be seized by creditors in the event of death or incapacitation.
17. Not Creating a Trust
A trust can help manage assets and control how they’re distributed after death. When no trust exists, the family may have to go through the time-consuming and expensive process of probate.
20. Not Funding a Trust
A trust can be a powerful tool for estate planning, but it’s only effective if it’s properly funded, otherwise assets may not be distributed as intended.
Estate planning is an important process that everyone should go through. Taking the time to plan ahead protects assets and ensures loved ones are taken care of. The planning process can be complex with many rules and pitfalls, so avoid making mistakes, be sure to work with an experienced estate planning attorney.