Estate Planning Mistakes and How to Avoid Them
Estate planning is a unique area of law. It’s not adversarial, so it’s relatively easy to accomplish all your goals, but if you make any mistakes, you won’t be around to fix them. For this reason, it’s essential to put a lot of thought into every aspect of your estate plan and benefit from a professional’s advice.
To help you understand your estate planning needs, we’ll go over some of the most common mistakes people make and how to avoid them.
1. Waiting Too Long
This is easily the most common mistake people make. Even though most people recognize the need for an estate plan, it is easy to keep putting it off. None of us enjoy contemplating the prospect of our death, but it will happen someday, and it’s not always as far in the future as we might hope. An unexpected death is tragic enough; failing to leave a clear plan for your estate only makes things harder for your loved ones.
How to avoid: Stop delaying and start thinking seriously about your estate plan. It’s not as time-consuming or expensive as you might think.
2. Failing to Minimize Tax Burden
Every person wants the maximum portion possible of their estate to their beneficiaries and the minimum amount possible to the government via taxation. However, with a little guidance, it is possible to minimize your estate’s tax burden or avoid taxes altogether.
How to avoid: Not all estates will be taxed, so it’s important to first out if all or portions of yours could be taxed. If so, various means, such as living trusts and charitable donations, could reduce or eliminate those taxes. This is best accomplished with the aid of an attorney.
3. Drafting Complex Documents on Your Own
It is possible to create a straightforward estate plan with a fill-in-the-blank will, you find online, but it’s not always a good idea. It may work for someone with few possessions and very specific wishes about who should receive their property after they die. Still, the larger and the more complicated the estate, the more problematic a DIY approach is likely to be.
Because the decedent is not around to answer any questions, estate law is full of formalities that must be followed to prevent mistakes and fraud. This is especially true when it comes to more complicated procedures such as creating a trust. If done improperly, the probate court may set aside your documents and come to its own conclusions.
How to avoid: If you are working on your own estate plan and you’re not sure if you are doing something correctly, it’s a good indication you should speak to a professional. You should talk to an attorney if you have a large estate.
4. Not Naming an Executor
An executor is tasked with putting your estate plan into action after you pass away. For example, if your estate includes a home or real estate, the executor will have the legal authority to transfer the deed or sell the property as appropriate. If you don’t name an executor in your will, the probate court will assign someone to the role. However, that person may not be the one you want to take on the task, or they simply may not be up to the responsibility.
How to avoid: Choose someone capable and trustworthy to be your executor, discuss the situation with that person, and name them your executor. If you’re unsure who to designate or if your estate is particularly complex, having your attorney act as executor may be a good idea.
Depending on the nature of your estate, there may be potential for conflict between beneficiaries after you pass away, which is the last thing most people want as their legacy. The most common root cause for such conflict is when someone fails to communicate their wishes while still alive, leading to surprise, resentment, and confusion.
How to avoid: Simply speaking to people in advance (including those who might be disappointed by your plans), giving them notice, and allowing them to ask questions can clear up many problems and reduce the likelihood of conflict later.
Consult with a Professional
With your legacy on the line and no ability to correct any mistakes after you’re gone, the best choice you can make is to sit down with an estate-planning attorney. You can ask questions, identify issues that may not have occurred to you otherwise, and create a comprehensive estate plan that accomplishes everything you want.
To start the process, schedule an appointment today.