Estate planning is the process where you decide what happens to your property after death. It also includes a plan for what to do should you become incapacitated. This planning involves wills, trusts, powers of attorney, and so on.
Too often, people rush into their plan. The slightest error could lead to trouble later. This trouble could happen after you are gone or unable to intervene, meaning your wishes may go unfulfilled.
Here are nine common mistakes people make in estate planning.
1. Putting It Off
Always remember, you cannot predict the future. At any moment, disaster could strike, and this could leave your family wanting. Even if you have modest means, you should plan as soon as possible. Otherwise, your property could fall into intestate succession, and the court could spend more money than is necessary. Also, your assets could go to the wrong people.
2. Excluding Others While Planning
It’s easy to get narrowminded when estate planning. “It’s my money,” people think. “I can do what I want with it.”
While this is true, don’t forget the point of the plan: taking care of your loved ones after you are gone. You should include your spouse, adult children, close relatives, and any other stakeholders in your plan. Listen to their needs and concerns, and try to build your plan around those.
3. Giving Everything to One Person
Just to keep things simple, people sometimes give their entire estate to their spouse, adult child, domestic partner, etc. This has benefits for that person, but it can leave others empty-handed.
No matter how much you trust this single recipient, you could be creating legal trouble for them later. All your property will be under their direct ownership. Even when they want to give it to someone else, they may have legal entanglements that make doing so difficult.
Furthermore, you make them a target for anyone who feels left out. Your single recipient could be open to litigation, even though they had no control over the situation.
4. Forgetting About Incapacitation
Estate planning is about more than death. It also helps protect you and your assets when you are no longer able to care for yourself. Remember, you need two distinct plans: one for after you’re gone and one for while you’re still here. You must consider power of attorney over your healthcare and finances in your plan.
5. Planning for Your Children’s Care
It’s easy to get so wrapped up in money and assets that you neglect to make a solid plan for what should happen to your kids. In your will, you must name a caretaker. Otherwise, the state can make this decision. Hopefully, it will give the kids to a close relative you trust, but it could put them into the foster system. It may even choose to separate them.
Furthermore, your plan should detail a way to protect their money before they are 18. One good option is establishing a trust. This keeps the money out of the state’s hands, as it can control your child’s money before they are old enough to receive it.
6. Neglecting Taxes and Debt
Don’t forget, debt is a part of your overall assets. Furthermore, probate and similar processes cost money, and there are always taxes to consider. Take these expenses into account before you assume that you can simply give your bank account over to a loved one.
7. Being Disorganized
Your estate plan will be on paper, and that paper must be protected. Make sure you have copies for yourself, your attorney, your spouse, and so on. Keep track of who has a copy, and don’t bury yours under a ton of other documents. It should always be in the same spot, easily accessible.
Furthermore, get ready to destroy and replace these copies any time you make changes. Everyone needs the most recent version to avoid legal entanglements later.
8. Forgetting Updates
Estate planning can take some time, and you can easily think, “That’s over with,” never returning to your plan. Life, however, changes. You may get divorced, remarried, have more children, etc. It’s important to keep updating your plan as you go. Otherwise, important people can get left out.
9. Not Consulting a Lawyer
You know how you want your asset distributed. You may not, however, know the best methods to make sure everything happens correctly. It is crucial that you consult an attorney when planning for your estate. They can help you write solid legal language that keeps others from challenging your will or your trust. They can also point out any mistakes along the way, keeping your plan in good shape.
Our firm is here to help in your estate planning. For a free consultation, call us today at (239) 309-2870. You can also contact us online.