What Kind of Estate Planning Mistakes Do People Make?
Estate planning for any sized estate is an important responsibility to loved ones. Done correctly, it can help families flourish over generations, control how legacies are distributed and convey values from parents to children to grandchildren. However, a failed estate plan, says a recent article from Suffolk News-Herald titled “Estate planning mistakes to avoid, ” can create bitter divisions between family members, become an expensive burden and even add unnecessary stress to a time of intense grief.
Here are some errors to avoid:
This is not the time for do-it-yourself estate planning.
An unexpected example comes from the late Chief Justice Warren Burger. Yes, even justices make mistakes with estate planning! He wrote a 176 word will, which cost his heirs more than $450, 000 in estate taxes and fees. A properly prepared will could have saved the family a huge amount of money, time and anxiety.
Don’t neglect to update your will or trust.
Life happens and relationships change. When a new person enters your life, whether by birth, adoption, marriage or other event, your estate planning wishes may change. The same goes for people departing your life. Death and divorce should always trigger an estate plan review.
Don’t be coy with heirs about your estate plan.
Heirs don’t need to know down to the penny what you intend to leave them but be wise enough to convey your purpose and intentions. If you are leaving more money to one child than to another, it would be a great kindness to the children’s relationship, if you explained why you are doing so. If you want your family to remain a family, share your thinking and your goals.
If there are certain possessions you know your family members value, making a list those items and who should get what. This will avoid family squabbles during a difficult time. Often it is not the money, but the sentimental items that cause family fights after a parent dies.
Understand what happens if you are not married to your partner.
Unmarried partners do not receive many of the estate tax breaks or other benefits of the law enjoyed by married couples. Unless you have an estate plan and a valid will in place, your partner will not be protected. Owning property jointly is just one part of an estate plan. Sit down with an experienced estate planning attorney to protect each other. The same applies to planning for incapacity. You will want to have a HIPAA release form and Power of Attorney for Health Care, so you are able to speak with each other’s medical providers.
Don’t neglect to fund a trust once it is created.
It’s easy to create a trust and it’s equally easy to forget to fund the trust. That means retitling assets that have been placed in the trust or adding enough assets to a trust, so it may function as designed. Failing to retitle assets has left many people with estate plans that did not work.
Please don’t be naive about caregivers with designs on your assets or relatives, who appear after long periods of estrangement.
It is not pleasant to consider that people in your life may not be interested in your well-being, but in your finances. However, this must remain front and center during the estate planning process. Elder financial abuse and scams are extremely common. Family members and seemingly devoted caregivers have often been found to have ulterior motives. Be smart enough to recognize when this occurs in your life.
Reference: Suffolk News-Herald (Dec. 15, 2020) “Estate planning mistakes to avoid”