The purpose of an estate plan is often misunderstood. We are not just planning for a future with ourselves in mind, we are planning for the future of our families in a world where we are no longer present. Many parents contribute to a college fund for their children, work hard to provide them with the essentials they need, and otherwise care for and support them as they continue throughout their lives. A well-put-together estate plan demonstrates a similar concern for those we love and care about.
Of course, it is often human nature to lock ourselves in the present. Because of this, our future plans are often clumsily formulated or altogether dismissed. When it comes to estate planning, here are some common mistakes that can end up causing undue distress and heartache in the future:
1. Not Creating a Formal Plan
Though many may have an idea of how they would want their assets distributed, this is of little help when the individual is no longer able to communicate their desires. If an individual does not have a will or trust in place, state succession laws, as well as the probate process, will determine where their assets go. Getting started on a formal plan is a large step towards asset protection and peace of mind.
2. Not Planning for Old Age
While in our youth or middle-age, it is easy to avoid thoughts of a time when we will be unable to care for ourselves. However, the cycle of life tells us that time will most likely arrive for each of us. Forethought about our care during those years is very important because there may be a time when the resources of loved ones will not be sufficient.
3. Failure to Update Over Time
As we age, more members are added to our families, more assets are required, and situations change. Having a way to update a formal estate plan as times change is very important to preserving the integrity of an individual’s wishes and desires.
4. Failure to Consider Tax Implications
There are many ways to help keep the money in the family, but it requires extensive knowledge. Doing things such as converting traditional retirement accounts to Roth accounts, setting up trusts, gifting funds, among other things can reduce tax liability. An experienced estate planning attorney can help identify areas that will maximize the value of your estate.
5. Failure to Properly Plan for Children/Beneficiaries
Specifying in whose care your children will fall as well as how funds will be used to care for them are very important pieces of the estate planning process. Oftentimes, individuals are far too vague when it comes to their children, other beneficiaries, and specific utilization of assets. This is a part of the process that should be very clear and detailed.
6. Not Preparing for the Unexpected
Although we all expect to live long, full lives that is not a reality for many individuals. Accidents happen and unforeseen circumstances commonly present themselves. Being prepared for such things, in the event they happen, is very important for the protection and well-being of the whole family. When it comes to estate planning, it is always good to think as if the distant future is right around the corner.
Consult a Trusted Estate Planning Attorney
The complexities of a formal estate plan can be overwhelming, especially if the number of assets and beneficiaries is large. When distributing assets among several parties, there is a lot of room for error and confusion. When the wishes and desires of the deceased lack clarity, there is little ability to interpret intentions and resolve issues. Having a professional help you construct and reinforce your estate plan can be hugely important, especially in the event of unexpected circumstances. It may not seem terribly pressing now, but the simple truth is that when we are gone, it is too late to arrange our affairs. If you have questions regarding your plan for the future, contact us today. We are here to assist you.