Estate plans can only be achieved and implemented with only the appropriate documents with proper inclusions. It is quite easy to sit alone and make these plans, however, any wrong details, or documentation may result to loss of assets, properties, investments, retirement benefits, and even more annoying and draining probate process. Any mistake or wrong inclusion proves pivotal to your plans. As such, you should consider planning with an estate planning lawyer to avoid these common estate planning mistakes.
Not having an estate plan at all
This is the most common estate planning mistake any one can make. A lot of people cringe at the thought of their death and so may fail to make definite plans towards it. When a person dies without having a will, trust, or any other asset distribution document in place, then the state laws would determine where their assets go. Also, some people plan with their lips without documenting any real plan.
Not updating your estate plan.
Estate planning should not be abandoned at a corner after creation. Estate planning documents such as wills and trusts, etc., are always subject to state laws and these laws are often amended from time to time. Also, these laws vary across states and you would have to amend your will or trust if you move to a state where the estate laws are different. When a baby is newly born into your family or a beneficiary dies before you, you consequently would have to update your estate plan to address the change.
Failing to plan for incapacity and long-term care
Not making plans to address sudden mental or physical disability may be detrimental to your finances. When estate planning, you should consider creating a living trust or power of attorney in order to name a person who would act on your behalf in the event you fall into illness or involve in a fatal accident. No estate plan is complete without planning for long-term care as a huge percentage of American senior citizens would need long-term care before they die.
Not planning for minor children
Ensuring that your children are properly cared for is one of the foremost importance of estate planning for most parents. Untimely death is an unfortunate possibility, thus you should create a will or trust designating a guardian or trustee to manage funds which you would leave for your minor children and clearly spell out how the funds are to be used for their benefits.
Not planning for estate tax savings
Another common mistake when estate planning is not planning to reduce your estate taxes. A great way to reduce estate taxes is by making gifts. According to the Internal Revenue Code, gifts below $14,000 a year per spouse made to businesses, groups or individuals, will be excluded from estate tax. This will invariably lead to your having more funds in your estate to pass on to your beneficiaries.
Not taking advantage of the federal tax exemption
Since 2018, the federal tax exemption has been set at $11.18 million per spouse. The tax exemption policy is the easiest way for couples to avoid estate taxes but unfortunately, some people do not take advantage of this. Surviving spouses are allowed to take on the deceased spouse’s unused exemption through a “portability election”, thereby doubling the surviving spouse’s exemption amount.
Choosing the wrong personal representative
Many people would think appointing their spouse or child as their fiduciary but this often is a mistake. Such persons would be too emotionally tied and due to grief, may not perform their fiduciary roles as supposed. A more financially experienced person would be better suited as a fiduciary.
Contact our Estate planning lawyer
Our estate planning lawyer is empathic and listens keenly to the problems and goals of his clients, and then offer legal assistance in drafting a proper estate plan that addresses each issue and helps achieve the estate goals. Having an estate plan is not enough, having a proper one that better reflects your intentions and offers you the best benefits is what matters most. Estate planning is a legal and financial matter, one better left in the hands of the professionals to ensure that these mistakes do not affect you. Contact our estate planning attorney today.