Estate planning is complicated, but a well-thought-out plan can give your loved ones peace of mind and provide for them long after you are gone. However, there are some common mistakes families make when planning for the future. Keep reading to find out more about the 12 most common estate planning mistakes and how you can avoid them.
Mistake #1: Not Having an Estate Plan
The most broad and common issue occurs when people neglect to draft a plan at all. Not only does a failure to do so jeopardize your assets, but it also can jeopardize your loved ones. A common misconception is that estate plans only protect money when in actuality they can do so much more.
Mistake #2: Procrastinating
While it’s important to start your estate plan when you can, procrastinating is a mistake. Waiting too long to establish your plan can mean that documents get lost, assets lose value, or time itself becomes a hinderance to your health and ability to complete the plan. It’s imperative that you consider your future as soon as possible.
Mistake #3: Attempting to Plan Around Assets
However, while it’s important to create a plan in a timely manner, it’s dangerous to start in the wrong place especially if you decide to shape your plan around specific assets. Getting too specific can mean that you miss the fact that those assets are temporary. For example, you may not retain season tickets for the duration of your life. That is why it is crucial to include language pertaining to a variety of assets especially those that last.
Mistake #4: No Asset Liquidity
Similarly, to the importance of keeping durable assets in mind, ensuring that some or all of those assets are liquid is crucial. When assets have liquidity, they can be divided and are typically more accessible. This means that your loved ones are able to divvy up assets according to your wishes. Asset liquidity is also important for business owners.
Mistake #5: Forgetting Digital Assets
In the digital age, assets can take all shapes and forms. However, it’s easy to lose track of them over time. As mentioned previously, time is of the essence when drafting an estate plan to prevent this issue from occurring. Either way, you must keep careful records of all digital investments including passwords, digital wallets, and more.
Mistake #6: Not Considering Tax Implications for Inherited Property
When considering assets, most people forget to consider taxes. It’s easy to assume that taxes you pay on property while alive simply disappear, but that could not be farther from the truth. Not only are there taxes on assets themselves, but estate taxes could also apply.
Mistake #7: Failure to Consider Incapacity
It’s hard to imagine making a will while you’re in the prime of life, but as we’ve mentioned previously, it’s crucial that you consider the future now. As we age, we become more susceptible to physical challenges – incapacitating factors. If a will is drafted and signed while incapacitated, it may not be legally binding.
Mistake #8: Not Planning for Disability or Long-Term Care
Similarly, many people neglect to plan for or include allowances for disability or long-term care. There are standard procedures for this including establishment of a Power of Attorney and health care representatives, but it’s crucial to account for end-of-life costs like disability and long-term care.
Mistake #9: Neglecting to Select a Power of Attorney
As mentioned in the previous section, many people forget to select a Power of Attorney and/or health representatives. The Power of Attorney is responsible for overseeing the execution of the will and in many cases, making critical decisions on your behalf. Healthcare representatives are chosen to make medical decisions on your behalf. Whether one person or more than one is selected for these positions, it is of vital importance that they be trusted individuals with your best interests in mind.
Mistake #10: Not including Funeral and Burial Wishes
In some cases, people verbally inform their loved ones of their burial wishes and consider the issue resolved. However, simply telling your wishes to a loved one may not be enough. Funerals are challenging logistically and financially and neglecting these concerns in the estate plan can create problems for family members trying to settle the estate.
Mistake #11: Not Updating Your Estate Plan
For those with an existing estate plan it may seem redundant to update it. However, nearly all of the mistakes mentioned in this blog could still happen even if there is already a rudimentary plan in place. The truth is things change whether they be people or assets and the only way to soften the blow is by preparing for these changes in advance.
Mistake #12: Not Hiring an Attorney
Estate planning is complicated, but it doesn’t have to be. Most people turn to an attorney if they’re facing legal trouble like criminal charges or a lawsuit, but the practice of law applies to estate planning as well. An estate attorney knows how to apply the law to your specific circumstances and can guide you to the right estate planning methods for you. They can also help you keep your plan up to date.
How To Avoid Estate Planning Mistakes
The best way to avoid estate planning mistakes is by enlisting the help of an attorney. It’s easy to forget a detail that could greatly impact you and your family. With the help of our experienced attorneys at Dorcey Law Firm, you can plan for the future with confidence. We take care of the legal complexities so you can have peace of mind.
Contact our attorneys today for more information.