Estate planning can be a complex process, but a well-crafted plan provided by our experienced law firm, brings peace of mind to your loved ones and ensures their financial security long after you’re no longer with them. When navigating through this confusing process there are numerous mistakes families commonly make when preparing for their futures. Here are the 12 most common estate planning mistakes people make and how you can avoid them:
Mistake #1: Neglecting to Establish an Estate Plan
One of the most widespread and significant mistakes is failing to create an estate plan altogether. Not only does this place your assets in jeopardy, but it also endangers the well-being of your loved ones. It’s a common misconception that estate plans solely safeguard finances when, in fact, they serve a broader purpose. For example, a well drafted plan will ensure your minor children are in the proper hands and cared for when you pass, family members with special needs are cared for without having benefits disrupted, as well as protecting loved ones (and yourself) from potential future creditors.
Mistake #2: Procrastination
Initiating your estate plan at the appropriate time is crucial, and procrastinating is a mistake made by many people. Delaying the establishment of your plan can result in lost documents, diminishing asset values, or time constraints due to health or other factors. It’s vital to consider your future today.
Mistake #3: Asset-Centric Planning
While timely planning is essential crafting your plan around specific assets can be problematic, particularly if those assets are subject to change. For example, season tickets may not be a permanent possession throughout your life. Therefore, it is imperative to incorporate language that encompasses a range of assets, especially those of a more transient nature.
Mistake #4: Lack of Asset Liquidity
In line with addressing the importance of versatile assets, ensuring that some or all of your assets possess liquidity is essential. Liquid assets can be divided and accessed more easily, allowing your loved ones to distribute them according to your wishes. Asset liquidity is particularly important for business owners.
Mistake #5: Overlooking Digital Assets
In today’s digital era, assets come in various digital forms and it’s easy to lose track of them over time. Time is of the essence in estate planning to prevent this issue. It is crucial to maintain meticulous records of all digital investments, including passwords, digital wallets, and more.
Mistake #6: Ignoring Incapacity
It may be challenging to envision creating a will while in your prime, but thinking about your future is vital since none of us knows what tomorrow brings. With age, the likelihood of physical challenges or incapacitation increases. If a will is drafted and signed during a period of incapacitation, it may not hold legal validity.
Mistake #7: Failing to Plan for Disability or Long-Term Care
Similarly to incapacitation, many individuals overlook planning for disability or long-term care. Protocols (such as appointing a Power of Attorney and healthcare representatives) should be followed, however, it is essential to consider end-of-life expenses such as disability and long-term care.
Mistake #8: Omitting the Selection of a Power of Attorney
It is way too common that people neglect to designate Power of Attorney and health care representative. The Power of Attorney is responsible for overseeing the execution of the Will, and in many cases making vital decisions on your behalf. Healthcare representatives are entrusted with making medical decisions on your behalf. Whether one or more individuals are chosen for these roles, it’s of paramount importance that they are trustworthy individuals with your best interests at heart.
Mistake #9: Neglecting to Include Funeral and Burial Preferences
In some instances, individuals communicate their burial wishes verbally to loved ones and believe the matter is resolved. However, merely sharing your wishes verbally may not be sufficient. Funerals involve logistical and financial complexities, and failing to address these concerns in your estate plan can create problems for family members tasked with settling the estate.
Mistake #10: Failing to Update Your Estate Plan
If you already have an estate plan it may seem redundant to update it, however, most of the errors we have mentioned can still occur even if you have a basic plan in place. Change is inevitable, whether concerning individuals or assets, and the best way to adapt is by proactively preparing for possible changes.
Mistake #11: Neglecting Tax Implications for Inherited Property
When contemplating your assets, it’s common to forget about tax implications. It’s easy to assume that property taxes you pay while alive cease after your passing. However, that assumption is far from accurate. Taxes are applicable to assets themselves and estate taxes might also come into play.
Mistake #12: Failing to Consult an Attorney
While most people quickly turn to an attorney for legal issues such as criminal charges or lawsuits, the practice of law extends to many other disciplines including estate planning. Estate planning is all about your future and legacy. What happens when you die or if you become incapacitated? Do you have a plan in place? Our firm possesses the expertise to apply state-specific estate laws to your top concerns and interests, guiding you to the perfect estate plan tailored just for you. Estate planning is intricate, but our experienced legal team will help you through all of these challenges with ease.
How to Avoid Estate Planning Mistakes
The most effective way to evade estate planning mistakes is to seek the assistance of a well-qualified attorney such as Monique M. Sadarangani. It is easy (even for less experienced attorneys) to overlook a details on your estate plan, and this oversight can have damaging consequences to your original intentions. Let us help you plan for your future with confidence. We handle all of the legal intricacies for your personalized estate plan and will make the process easy for you–all of this while providing you with peace of mind that your intentions are being fully met.