5 Estate Planning Mistakes to Avoid
Unfortunately, most Americans are indifferent to estate planning or completely ignore the importance of having an estate plan. However, when it comes to estate planning, there are some mistakes that you cannot afford to make.
Below are five (5) of the most critical estate planning mistakes:
1. Not Having any Estate Plan. This is the biggest mistake, especially among professionals and young parents who assume they do not need one. Passing away intestate – or without an estate plan – will assure local state laws determine receives all of your assets in the event of your passing. In addition, a Judge will decide who cares for all of your minor children.
2. Failing to make Proper Beneficiary Designations.This typically happens by not updating beneficiary designations on your life insurance, annuities, and retirement plan accounts. In fact, many clients are surprised to learn that beneficiary designations supersede or override instructions left in their Last Will and Testament or under the terms of a Trust Agreement.
3. Not Reviewing Legal Documents Regularly. An estate plan should be reviewed whenever there are significant personal, financial, for tax law changes, and especially upon marriage, divorce, death of a loved one, receipt of an inheritance, upon birth of a child, relocation to a new state. Such updates to your estate plan can ensure that you and your family are protected in the future because of changes in circumstances, which often change over time.
4. Not Funding Your Living Trust. A properly designed Living Trust has no operative effect if the Trust is not funded during your life. These type of Trusts must be funded to operate correctly. If you pass away and leave an unfunded Trust, there may be significant costs, delays, and publicity which occur due to the need to raise a probate proceeding with the Court – which is what you were trying to avoid by creating a Living Trust in the first place. As a result, your estate would need to go through the probate process and any Trust you desired to establish for specific beneficiaries would need to be funded after your death.
5. Giving All of Your Property Outright to Beneficiaries Too Soon. As much as 75% of inheritances are squandered away within 12 – 18 months after being received. Therefore, in order to protect and preserve your assets for your family, you may wish to establish a Trust so that your beneficiaries receive their inheritance over a period of time, or over the course of the beneficiary’s lifetime, to reduce the risk of their inheritance being exposed to the potential claims of creditors, predators, tax liens, and bankruptcy.
You can prevent making these five (5) estate planning mistakes by working together with a competent and experienced estate planning attorney to establish a comprehensive estate plan.
We can work together with you to design and implement a well-crafted estate plan in order to protect you during your life, and ensure that you leave your family a lasting legacy.
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