Are you ready to create your estate plan? Excellent! What an exciting time to address your family, estate, and future. And what a time to fall into pitfalls!
Estate planning is an essential and such a powerful strategy to ensure your wishes are honored when something happens to you. But so many people go head first in ignorance, and so make costly mistakes along the way. But it’s a good thing you’re here. It shows your desire to create an error-free estate plan.
So read on to find out what estate planning errors you need to stay away from.
1. Not having an estate plan
It may sound funny or even counter-intuitive but it is not really so. Many people have died wrongly thinking they have an estate plan. They say, “my possessions will definitely go to my children.” But if you do not have a valid will or trust where such instructions are laid down, then you have no say in what happens when you pass away. The court will step in and decide for you. And your favorite child may end up getting the least valuable asset because the law doesn’t recognize emotions.
2. Not planning for incapacity
Nobody wishes it, but disaster can strike at any time. You may be involved in an accident and rendered incapacitated. You can’t manage your business; neither can you tell the doctors what you want. Who steps into your shoes? And how are you sure they would have your best interest at heart?
You need to establish a Power of Attorney or Trust to authorize a trusted individual to manage your affairs and make decisions for you when you’re unable to manage things yourself. By so doing, your business can be in competent hands until you recover. Also create a living will to spell out your wishes in an end of life situation.
3. Failure to plan for minors
Many people do estate planning and allocate properties to children below 18. But minors cannot inherit until they reach adulthood. So it is vital that you establish guardianship or a living trust for them, whereby a trusted fiduciary will manage the assets you left on your children’s behalf. When they come of age, they can then inherit.
4. Not considering probate
Probate is a legal process that takes place when you pass away, whereby the court validates your will and allows your estate to be disbursed accordingly. It is an expensive and lengthy process, taking months or even a year before your loved ones can inherit. By then, a huge part of your estate would have been used to foot bills and taxes. You can avoid probate by using a trust instead of a will. An experienced estate planning attorney can help you do this through proper planning.
5. Failure to execute tax planning
In many states, taxes are imposed on estates before the survivors can inherit. This tax is known as estate tax. Since not all states do this, you would need to check your state laws. Apart from the state estate tax, there is a federal estate tax that must be paid if your estate worth’s over $11.58 million at your death.
Estate tax can eat a significant portion of your estate. In the long run, your loved ones would not receive the full amount of what you want for them. The good news is that you can avoid estate tax via certain estate planning strategies. An experienced estate planning lawyer is in the right position to help you with that.
But sadly, many planners fail to consider estate tax and their loved ones end up bearing the brunt.
6. Not updating your estate plan
You have created your estate plan. Great! But life goes on. What happens when you acquire a new house, business, and child, get divorced, remarry, or lost a beneficiary in your will?
Any of these occurrences will require an update in your estate plan. You need to address your new acquisitions and remove the lost ones. You don’t want your insurance policy to be going to your ex-spouse.
7. Not seeking assistance from an estate planning attorney
When you have experienced hands working with you, there are fewer tendencies for errors. An estate planning lawyer will give you professional guidance on the right strategies to use, and help you execute them, ensuring each document is compliant with your state laws.
To get the best of estate planning, do speak with an estate planning lawyer near you.
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