Some estate planning mistakes are inevitable, after all, it can be a complicated process. However, you don’t want to take a chance on making a permanent mistake in your estate planning documents. You’ve had a meaningful life, both acquisitively and through the relationships you’ve fostered. Therefore, protecting both your assets and your relationships is a top priority. Below are the top 5 mistakes to avoid when it comes to estate planning:
1. Not creating an estate plan at all
Potentially the worst estate planning mistake of this list would be ignoring estate planning entirely. Regardless of the size of your bank account or how extensive your list of assets may or may not be, you need to have some sort of estate planning documents set in place if something unplanned takes place. Having these documents ready to go in times of crisis can save your loved ones from a huge headache, not to mention that an estate plan ensures that you are taken care of during your lifetime, that your vision will be carried out after your death, and that the interests of your beneficiaries are intact and protected.
2. Not considering asset ownership
Taking an inventory of your assets is important when it comes to estate planning, but identifying which of those assets goes to whom is crucial. This piece may be even more important than taking the initial inventory, and more prevalent when it comes to common estate planning mistakes. By carefully considering asset ownership, each asset will affect whether it is an “estate asset” to be distributed in your will or not. Under the same umbrella, many spouses will make the mistake of not jointly owning their property. If one spouse has full ownership of a property and then passes away, that property will not go to your spouse.
3. Not considering tax implications
Estate tax liability is especially important to consider at the state level. Since the Tax Cut and Jobs Act of 2017, the federal exemption has been more than $11 million per person. However, there are also state tax exemptions to take into account. But, the cost of not accounting for estate tax is astounding and can eat into the amount of money you plan to leave to your heirs. The good news is, there are ways to minimize these taxes if you structure your estate plan properly.
4. Assuming there’s only one way to plan your estate
Estate planning is not a one-size-fits-all type of deal. It is not a document with a bunch of fill in the blanks that you can easily execute on your own. Estate plans are not all the same, and understanding that there are multiple avenues available to you can ensure your estate plan is tailored to your specific needs. Your family is one of a kind, therefore your estate plan should be as well.
5. Not updating your plan periodically
Finishing an estate plan is an accomplishment, but, unfortunately, the work doesn’t end there. Even something as simple as forgetting to update beneficiaries can make your estate plan obsolete as time passes by. In the occurrence of any life event, an estate plan should be revisited and updated to protect yourself and your loved ones. If you fail to update your estate plan, it may not reflect your wishes after you’ve passed away.
When it comes to creating the most effective estate plan, an established estate planning attorney can assist you. Beginning the process will help give you peace of mind in knowing that your assets are protected.
Contact Attorney James M. Miskell