Estate Planning Mistakes to Avoid

Taking the time to manage your assets and ensure they will be distributed to your liking after you pass on is an important component of estate planning. Many think that you have to be wealthy or own a lot of assets to benefit from this type of planning. This is not true, as everyone has the potential to benefit from a carefully organized and compliant estate plan. The following details some of the most common estate planning mistakes to try and avoid when planning for your future.

Unfortunately, rushing into the process or being uninformed about the specifics can quickly turn a responsible decision into a headache.

Not Having an Estate Plan

Many people make the mistake of not creating an estate plan. One of the most common reasons why they avoid doing so is that they believe they are too young or do not have enough assets to start the process. Because no one is certain when their time will come, this makes estate planning an activity that extends to everyone, not just the older population.

If you were to pass away without an estate plan in place, it could put unnecessary stress on your remaining family. Having no plan may require them to make decisions in conjunction with state laws on how your assets are to be distributed. This can be upsetting for families to deal with, especially at such a vulnerable time and if they are not certain what your intentions are.

Failing to Update Your Will

Life circumstances are constantly changing as time goes on. This is why it’s recommended that once you create your will, you regularly check back in with its terms to make sure you are still comfortable with the direction it gives. This is especially true if you recently dealt with a new marriage, divorce, birth, or death affecting those mentioned in your will.

Underestimating the Significance of a Power of Attorney

A power of attorney is an individual designated to handle your affairs if you become unable to speak for yourself. When someone has not set a power of attorney, it puts the responsibility onto the family to undergo what could be a long court process to try and gain authority over your decisions.

Because your designated power of attorney will have the authority to make important decisions on your behalf, like what type of medical treatment you should receive, it’s extremely vital not to underestimate the gravity of this responsibility. If you choose someone you do not completely trust or who is not that close to you, it could lead to decisions you would not have made for yourself.

Not Planning for Taxes

Most people do not realize how much tax could be taken out of your assets before they reach the individuals you wish to receive them. Without taking into consideration potential taxes and adjusting your plan, you could end up leaving much less to your beneficiaries than you thought. Consulting with an estate planning attorney can help you find ways to plan for and minimize the tax burden.

Choosing the Wrong Executor or Trustee

Both executors and trustees are responsible for managing and distributing your estate when the time comes. You want to choose someone who is capable of handling these duties. If someone is known to be irresponsible in other areas of their life, they may not be a good fit for this role. You also want to avoid choosing someone who might have conflicts with others in your family, which could lead to the disregard of your desires.

FAQs

Q: How Often Should You Review Your Estate Plan?

A: You should review your estate plan at least every three to five years to ensure it is still aligned with your wishes. Major life events like a divorce or the birth of a child should override this rule and prompt you to check in sooner. Following these guidelines can help ensure your plan is always aligned with your current mindset to prevent any outdated documentation from dictating how your estate is distributed.

Q: What Are the Three Main Priorities You Want to Ensure With Your Estate Plan?

A: The three main priorities you want to ensure with your estate plan are preferred asset distribution, a properly noted executor, and clearly defined beneficiaries. First, you want to make sure your estate plan distributes your assets as you wish. Second, your estate plan should clearly designate an executor or trustee. And finally, your estate plan should plainly list all your beneficiaries to minimize any chance of it being misinterpreted.

Q: What Is Poor Estate Planning?

A: Poor estate planning can be either not having a plan in place or having one that is inadequate. Generally, this refers to a lack of proper documentation that does not fully detail your desires or designate an executor, fails to list beneficiaries clearly, or makes your estate unnecessarily vulnerable to taxes.

Also, a proper estate plan should prepare for the chance you would become incapacitated and note who would make healthcare decisions on your behalf should that occur. Poor estate planning can lead to legal challenges and emotional distress for your loved ones.

Q: What Is the Most Important Decision in Estate Planning?

A: The most important decision in estate planning is taking the time to create a plan that will ensure your loved ones are protected. Hiring an experienced estate planning attorney will give you peace of mind that when you pass or if you become incapacitated, your assets will go to those that you wish. A knowledgeable attorney will help you put all the documents in place for when you need them.

Contact Robert G. Petrovich, Attorney at Law Today

At Robert G. Petrovich, Attorney at Law, our estate planning attorneys have spent years working with clients like yourself to create custom estate plans. Our knowledge in this space allows us to bypass common mistakes to ensure your assets are protected and will be distributed to your exact desires. Contact us today to begin the process.