When creating an estate plan, most people think only of their will, but they are actually quite comprehensive. There are many things that can go wrong with an estate plan, whether it’s from a change in family situation for you or one of your beneficiaries, a sale or purchase that affects your assets, or some minor change in the law. Here, we’ll go over some of the most common pitfalls to avoid in putting together your estate plan.
Estate planning is not something you do only when you get old or when your life seems to be winding to a close. Some events cannot be planned for, and you may find yourself suddenly short on time. In addition, not every aspect of an estate plan has to do with your passing. A well-constructed plan will also include provisions for who can make decisions on your behalf if you become incapacitated or detail who will get custody of any children still at home if you pass on. Having your plan together early will benefit you throughout your life, not just at its end.
The “Over and Done” Mentality
Financial planning—especially when it deals with your own death—isn’t the most pleasant of topics, so there is a tendency to put a plan together, write a will, set up a trust, and then store everything away where you won’t see it ever again. The truth is that finances, assets, tax laws, and family situations will all change over time, and those changes can dramatically impact how your estate will be distributed. As such, your plan will need to be constantly reviewed and revised in order to be effective.
Failure to Use Trusts
Trusts can help reduce the amount of your estate that’s exposed to taxes when you pass on. In addition, they can spare your children and other beneficiaries from massive losses when they inherit your estate. Failure to incorporate—and properly structure—certain trusts into your plan can result in a massive portion of your estate being lost to the state, creditors, or simple irresponsibility on the part of your inheritors.
Poorly Drafted Documents
In order to function the way it needs to, every document must be drafted properly. Any errors or unclear language can drastically alter the way your estate is handled, and it could mean the involvement of probate, which can be an expensive, stressful, and occasionally divisive process for everyone involved. Your will, the documents related to any trusts or assets you hold, and all other pieces of paperwork must be carefully structured so that they accomplish exactly what you want them to.
Doing It Yourself
Structuring your estate plan by yourself is incredibly risky, and it’s very easy to overlook exemptions, laws, and other factors that you would need to take into account to make the best plan possible. To minimize the impact of taxes and creditors on your estate and make sure your beneficiaries are treated properly and fairly, you will want outside help.
Skilled legal assistance can help you make sure your assets are properly looked after and handled when you structure your estate plan. The estate planning attorneys at Hart David Carson, LLP, can guide you through the process and help you avoid these pitfalls.