Estate planning mistakes can cause significant harm to your family and cost a lot of money. Get the knowledge you need to avoid these common mistakes here.
Common Estate Planning Mistakes
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A proper estate plan addresses and manages risks that could arise at the end of one’s life and beyond.
Estate plans are important, but it isn’t enough to just write a will and leave it at that. Creating a complete plan and avoiding common pitfalls and mistakes is critical!
Estate planning mistakes can be costly, time-consuming, and harmful to you and your family. Fortunately, the most common estate planning mistakes are easily avoided when you know what to watch out for. Here are a few common mistakes:
Ignoring your digital assets: We live in an increasingly virtual and digital world with online access to bank accounts, photographs, cloud storage, and social media accounts. Unfortunately, we often forget to grant power of attorney or beneficiary designation to have access authority and control our digital assets. If you fail to provide this authority, administering your digital assets will become very difficult and may lead to financial and emotional hardships.
Not considering advance directives: An advance directive contains instructions for your loved ones regarding your health and end-of-life care. You can also designate a person to make decisions for you if you can’t speak for yourself.
Pre-planning for retirement should be included in your trust planning. Planning for Medicare funding protects your surviving spouse at home with medicare bills and gives you a chance at a nursing home care.
Have an experienced estate planning professional guide you through your estate plans and choose the person you want to inherit your retirement accounts.
Not funding living trusts: The majority of estate plans make use of trusts. A trust is a crucial asset protection tool that can potentially shield your wealth from probate and high taxes. Failing to fund your trust makes the whole process pointless and defeats part of the purpose of estate planning.
Ignoring taxes: After drafting an estate plan, tax planning is crucial. Many people forget about estate tax liability. Aside from your estate owing taxes before beneficiaries are paid out, it is essential to consider how your gifts will affect individual heirs after the estate has paid out its taxes.
Not making gifts: Every year, the Internal Revenue Service allows us to gift up to a maximum amount that is excluded from estate taxes. Currently, the amount is $16000. Making these yearly gifts overall reduces your estate tax. Failing to consider tax consequences can have significant expenses on your beneficiaries.
Allowing your estate to be co-managed: While this might be an excellent thought to avoid probate, after your death, you leave the co-owner to deal with the other half of the property. They may be stuck paying taxes for both their taxable gift and your taxable estate. This includes handling the taxes involved with transferring assets in your estate.
Not planning for a disabled beneficiary: If you have a beneficiary with a disability, leaving them their inheritance does them more harm than good. Consult with lawyers for special needs planning to help you place their inheritance into a trust specifically designed to protect the beneficiary and keep them eligible for public assistance.
DIY estate planning: Creating a will and trust on your own is possible and inexpensive. But you might lack the strategic knowledge, experience, and foresight that a seasoned estate planning professional can provide. Also, failing to execute your estate plan properly might nullify part or all of it. This is particularly true if you have significant or complicated assets.
Including beneficiaries who cannot inherit: Oftentimes people will try to name beneficiaries who cannot legally inherit. For example, if you want to leave your property to children of age below 18 years old, you must also name a property guardian who can manage the assets until the child or children come of age.
How you can Avoid Estate Planning Mistakes
The easiest way to avoid common estate planning mistakes is by having an estate plan that clearly states your beneficiary designations and desires.
With a solid plan in place, you avoid certain assets going through probate independently and can prevent extreme expenses and estate taxes. You can accomplish all this with the help of an estate planning attorney near me.
Reach us at 404.410.6820 or [email protected] for legal services at our law firm for your estate plan, revocable trust, financial power of attorney, disability planning, and related legal issues.