Estate planning mistakes are not uncommon.
Last year was not what you expected it to be.
Although you likely hoped for a different start to 2021, you have found it to seem equally out-of-control.
You are reminded how you cannot predict the future.
As a result, you have decided to prioritize estate planning to prepare for whatever may come.
According to a recent Suffolk News-Herald article titled “Estate planning mistakes to avoid,” estate planing can be a wonderful gift to your loved ones.
Unfortunately, people often fail to properly create, implement, and maintain their estate plans.
What are some common estate planning mistakes to avoid?
Do-it-yourself estate planning.
With YouTube and online searches, you can learn to do so many things on your own.
While staining your deck may be one of those things, estate planning is not.
Did you know asset protection, distribution, and taxation are all governed by both state and federal laws?
That can be some pretty serious stuff when it comes to planning for your stuff.
Unless you are an experienced estate planning attorney, dollars to donuts you will overlook import details or use outdated information.
Neglecting to update your will or trust.
As previously mentioned, estate planning is governed by both federal and state laws.
These change throughout the years.
Your estate plan should change with them.
In general, you should review your estate plan about every three years.
In addition to laws, relationships, and circumstances also change.
If you move, get married, get divorced, have a baby, adopt a child, or have a family member die, you should schedule a review to update your plan.
I recommend annually, but certainly no less that every two years.
Being secretive about your estate plan.
Keeping your heirs in the dark can cause both relational and financial problems in the future.
Although you need not to share exact dollar amounts, you should share some information before you die.
If your estate plan includes unequal inheritances to your children, they may harbor less resentment if you explain your reasoning.
If there are family heirlooms or sentimental possessions, you should make a list and find out now who cares the most about each of the items when you divide them.
Lack of communication is one of the estate planing mistakes with the greatest potential for creating resentment.
Trust me, I have seen families torn apart over a ceramic bullfrog collection or grandma’s yellow pie pan.
Accidentally excluding an unmarried partner.
Marriage brings with it many protections and legal benefits.
If you have an estate plan in place, you will leave your unmarried partner unprotected and without a legal claim to your assets.
Is that your plan?
If no, then even with a Last Will and Testament in place, your partner will not benefit from certain estate tax breaks.
Aside from “death” planning, do not forget to address estate planning concerns regarding “incapacity” planning.
If you want your partner to be privy to and able to manage your medical and financial affairs if you are incapacitated, you will need a HIPAA Release, an Advance Health Care Directives, and a General Durable Power of Attorney.
Failing to fund a trust.
Of the many estate planning mistakes, this can be one of the more expensive ones to make.
A Revocable Living Trust (RLT) is used for many reasons.
Commons goals for using a RLT include avoiding probate, minimizing estate taxes, keeping your affairs private, and retaining greater control of asset distributions.
If you fail to “fund” your RLT by failing to retitle assets and rearrange beneficiary designations (think life insurance and retirement funds) to be owned by your trust, these will pass through probate or not as you intended.
Your plan will fail to work as intended.
Kind of like a fine automobile without any gasoline in the tank (or juice in the batteries, if a Tesla).
Trusting in scheming souls.
Some people are trustworthy and others are, well, untrustworthy.
You should be constantly vigilant for scams and financial abuse.
Even family members who appear devoted can take legal and financial advantage of their relatives.
The ability of human beings to rationalize even their criminal conduct seems to know no bounds.
Understanding common estate planning mistakes enables you to better protect everyone you love and everything you have.
Establishing a long-term relationship with an experienced estate planning attorney can help you create, implement, and maintain an estate plan that will work by design when needed.
Reference: Suffolk News-Herald (Dec. 15, 2020) “Estate planning mistakes to avoid”