What are some of the common pitfalls in estate planning?
By now, most people are aware that estate plans are not just needed by those who are extremely wealthy. As long as you have any savings or investments, a car, a home, or any possessions of value, you owe it yourself, your loved ones, and sometimes to the community at large, to make a plan as to how you want these things distributed after your passing. A qualified estate planning attorney is the ideal person to set up your estate plan so that it fulfills your wishes and is legally binding.
It is, unfortunately, not uncommon for people to make serious mistakes in preparing their wills and planning the distribution of their worldly good. In most cases, these mistakes are made by people who have attempted to do their estate planning independently, without the assistance of a skill and experienced lawyer. Much information about estate planning in available on the internet, but unless you consult with an expert, you are at increased risk of getting yourself into trouble and leaving behind a mess for your loved ones to clean up.
Estate Planning Problems
The following estate planning mistakes are made all too frequently:
[1] Not making a will at all
[2] Not updating your will periodically to address births, deaths, divorces, increased assets
[3] Not planning for incapacity from accident (e.g. traumatic brain injury) or disease (e.g. dementia)
[4] Not leaving charitable donations in order to reduce your estate tax responsibility
[5] Putting your child's name on the deed to your home (which will make the amount taxable)
[6] Making a poor choice of executor, even, sometimes when that person is your child or spouse
[7] Not transferring your life insurance policy to a life insurance trust to avoid having it taxed
[8] Failing to take advantage of the $675,000 exemption per spouse (credit shelter trust)
[9] Putting off estate planning until death or incapacity occurs
[10] Failing to consult with a professional estate planner who is savvy about legal and financial matters
Of this list of common estate planning mistakes, the last two are the most crucial. Procrastination has only disadvantages since we are all going to die at some unknown time in the future, and a great many of us will become disabled. Denying these realities only makes dealing with them more difficult and painful when they occur. Also, not consulting with an expert about such important decisions is foolish. Once you decide to invest your time and emotions into planning your own future and the future of your loved ones, you should ensure that your wishes will be followed because they rest on a firm legal foundation.